A new survey by the Canadian Automobile Dealers Association (CADA ) illustrates the tough economics of owning a dealership during a pandemic, with 80 per cent of respondents saying revenue fell by more than half in April.
That’s up from the 73 per cent who reported the same situation in the previous survey.
CADA surveyed 579 respondents, representing about 1,304 dealership rooftops across Canada from May 1 through May 8.
Dealerships in Ontario and Quebec were closed as a precaution for much of April. And even though online sales were permitted, test drives were banned in Ontario. The two provinces represent 80 per cent of the Canadian new-vehicle market.
“Vehicle sales had precipitously dropped by 75 per cent to reach a historic low in April. This is clearly reflected in this month’s survey,” CADA Chief Economist Oumar Dicko said in a statement.
The association said it is now focused on its dealers returning to profitability and seeking government assistance.
Ontario dealerships are open once again, but by appointment only, and 90 per cent of dealerships surveyed across the country said their service operations are open. That’s up from a reported 77 per cent in the previous survey conducted in April.
Dicko said that while the federal government has helped mitigate the impact of COVID-19 has had on businesses, he would like to see more done.
“The government must introduce a robust post-crisis stimulus plan to revive the Canadian economy,” he said.
Auto dealerships are included in nearly all announced provincial Phase 1 reopening plans, and survey respondents indicated several measures would be necessary to have a successful sales rebound.
They are calling for:
- A national scrappage program;
- A GST/HST holiday on new-vehicle purchases;
- Increased incentives on greener vehicles;
- Increased lending capacity for vehicle and equipment.
“For the automotive sector, the recovery plan needs to focus on boosting demand to jumpstart the industry,” Dicko said.
For the first time, CADA also asked dealers about financial relief being provided by their banking institutions and their respective brand’s captive financing companies.
Forty-six per cent reported not yet receiving any relief from their financial institutions.
Of those reporting to have received some support:
- 54 per cent were very satisfied/satisfied with the mortgage relief;
- 57 per cent reported to be very satisfied/satisfied with new and used floor plan arrangements;
- 32 per cent are very satisfied/satisfied with the relief being provided on operating lines of credit.
“While the announced government support programs are good, it is troublesome that nearly half of respondents have not yet received any relief from their financial institutions,” CADA President Tim Reuss said in the same statement. “Of those that have received credit support, it is concerning that only 32 per cent are satisfied with the relief.
“We will definitely continue to monitor this situation, and work with government to advocate on behalf of dealers for expanded support wherever possible.”