The Canadian Automobile Dealers Association (CADA) is seeking assurances from automakers that they won’t penalize dealers opting to voluntarily close their businesses during the COVID-19 pandemic.
Perry Itzcovitch of Calgary’s Hyatt Group and past CADA chairman says under most dealer agreements, “if you close, you’re in violation of your dealer agreement unless the closure is government ordered. If closure is just recommended you could be in jeopardy of losing your franchise.”
Current CADA President Tim Reuss says the association has asked automakers to clarify how they would enforce franchise agreement clauses governing voluntary closures.
While “quite a few” brands have said there would be no issues with closures at this time, “not every brand has been as forthcoming as that, as rapidly,” Reuss said. “We’re still working on that. There are still a couple of brands that haven’t done so.”
He declined to name those manufacturers.
“Contractual concerns aren’t something that any of us in the industry need right now,” he said.
Automotive News Canada has reached out to several automakers for comment. In an email Thursday, Fiat Chrysler Automobiles said: “FCA supports any decision our dealers make regarding the operation of their dealership during these challenging times.”
Ford Canada echoed that sentiment, saying it was “100 per cent supportive of our dealers across the country making the best decision for their customers and employees regarding the continuity of their own sales and service operations, including decisions to temporarily close.”
Shahin Alizadeh, CEO of the Downtown Auto Group in Toronto, says he was in discussions with “senior management” at eight automakers before deciding to temporarily close his dealerships on Tuesday. He said automakers, in general, are only asking for dealerships that close to field online leads and to ensure that vehicles in need of “urgent services” are taken care of.
“In my opinion, it would be almost absurd for an OEM to take a hardline approach to this situation,” he says. “I don’t believe that’s what they’ll do, and that’s clearly not the impression that I’ve had with dealing with them. And I deal with eight of them. So, they’re generally on the same page as long as you provide minimum service for people to feel that they’re not left stranded.”
He says his stores will arrange for emergency roadside assistance, battery service and other offerings, even while his stores remain closed.
“Given that, we’ve given our OEMs enough comfort to say, ‘Yeah, that works for now,’” Alizadeh said.
