Nfld. & Labrador

The pandemic pummelled the auto business during a big sales season. Here's how it's coming back

Sales of new cars were down two thirds in April. Yet, despite closed showrooms and an economy at a standstill, dealers were able to close just over 900 sales.

Most new car dealers close to pre-COVID-19 staffing levels, says association

The automotive sales sector in Newfoundland and Labrador has been dealt a devastating blow by the pandemic. But insiders say it has not collapsed. Despite the closure of showrooms, there were more than 900 new-vehicle sales in April, according to Desrosiers Automotive Consultants. That's down from more than 2,800 for the same month in 2019. (Gary Locke/CBC)

Despite closed showrooms and an unprecedented drop in vehicular travel this spring as many people worked from home, Newfoundlanders and Labradorians still purchased new cars and trucks — albeit at significantly reduced volumes.

According to data from Desrosiers Automotive Consultants, there were 902 sales of light trucks, cars and other passengers vehicles in the province in April.

That figure is less than a third of the 2,801 new vehicles sold during the same month in 2019, which speaks to the public health emergency caused by the COVID-19 pandemic. 

Car dealers were among the non-essential businesses that were ordered to close in March. 

However, the fact that any vehicles were sold is a testament to the creativity and hard work of sales consultants, said Marian Templeton, executive director for the Automobile Dealers Association of Newfoundland and Labrador, which represents 52 new vehicle dealers in the province.

Automobile dealers have introduced strict cleaning measures to help prevent the spread of the COVID-19 virus. For example, vehicles taken for a test drive by prospective customers are sanitized before and after. (Gary Locke/CBC)

"It has slowed down. But to say it was a collapse would be an exaggeration," said Templeton. 

She also credited sales to the desire of customers who were keen to buy. 

"This is a vast province, and we need our vehicles," she said. 

Dealers say they had to hustle — and innovate — to close those deals. 

"We were down significantly, but we were still able to sell a significant amount of vehicles," said Alexia Russell Feltham, general manager of Terra Nova GMC Buick on Kenmount Road in St. John's. 

Across Canada, April sales of automobiles fell by nearly 75 per cent, according to Desrosiers. 

'Walk-around' videos replace test drives

But with strict physical distancing rules in place, dealers have used technology to interact with customers, including virtual appraisals, and sending vehicle "walk-around" videos to customers at a time when test drives were prohibited.

Alexia Russell Feltham is general manager at Terra Nova GMC Buick on Kenmount Road in St. John's. Despite the closure of dealer showrooms because of the pandemic, she said, Terra Nova managed to sell a 'significant' number of vehicles in April. (Gary Locke/CBC)

"The dealer principals who run these businesses are astute and have learned to roll with the punches," said Templeton.

Russell Feltham said customers, unable to kick tires in person, took to their computers. "They were still asking a lot of questions," she said. 

But no one is downplaying the devastating blow delivered to the sector, which typically sells more than 30,000 new vehicles — valued at roughly $1.2 billion — each year in the province, and employs some 2,500 people.

"It was a very emotional time," Russell Feltham said, describing the first few weeks after government started shutting down the economy in March, and management was forced to lay off nearly half the workforce.

Some auto assembly plants are slowly recovering from productions slowdowns, and that could mean dealers might not be able to offer their normal levels of selection for the next few months. (Sherry Vivian/CBC)

She was inspired by the fact that many older workers, fearing they were more vulnerable to the virus, volunteered go home so younger workers could remain on the payroll.

Showroom floors went silent

Dealerships that typically hum with activity in their service, sales and parts departments practically fell silent.

"It was a scary time because no one knew what to expect," said Russell Feltham.

Now, though, there are growing signs of a recovery.

Automotive dealers have been limited to providing essential repair and maintenance services during the pandemic, which is dramatically slowed activity inside the garages. (Sherry Vivian/CBC)

Spring is traditionally a busy time for vehicles sales, and business is on the uptick, say insiders.

Some auto dealerships in St. John's are family owned, dating back three generations, and Templeton said they have seen — and survived — bad times before.

"They've survived wars. They've survived economic crises in the past. So it's going to be a blip in our graph of life. But I'm sure we'll rise from the ashes," she said.

Test drives now OK again 

Customers are now permitted to take vehicles for test drives, and that means special sanitization measures in order to prevent the potential spread of COVID-19.

Most dealers are slowly calling back their employees in anticipation of what they hope will be a full reopening, with restrictions, on June 8. But that's only if the province decides to move to Alert Level 3.

"We're very excited, but very cautious," said Russell Feltham.

"We are looking forward to being able to open those doors and get people into our showrooms in a safe manner," said Templeton.

Marian Templeton is executive director with the Automobile Dealers Association of Newfoundland and Labrador. (Sherry Vivian/CBC)

But with so much uncertainty in the economy, dealers are being realistic about their expectations for the year.

And with some vehicle assembly plants turning their focus to manufacturing personal protective and medical equipment, they also expect some challenges in acquiring inventory to fill their lots.

"Most plants are starting to open up, so there will be a slight delay. By end of summer, we should have regular level of inventory," said Russell Feltham.

Meanwhile, inter-provincial travel restrictions and a campaign to encourage citizens to vacation in their own province could have some positive consequences for auto dealers, since it may encourage many drivers to invest into their current vehicle, or upgrade to a new ride.

"Let's get back to our new normal as quickly as we can," said Templeton.

This coverage is part of Changing Course, a series of stories from CBC Newfoundland and Labrador that's taking a closer look at how the COVID-19 pandemic is affecting local industries and businesses, and how they're adapting during these uncertain times to stay afloat.

Changing Course is a series of stories from CBC Newfoundland and Labrador about the stresses and effects on the local economy in the face of the COVID-19 pandemic. (CBC)

Read more from CBC Newfoundland and Labrador

About the Author

Terry Roberts is a journalist with CBC's bureau in St. John's.