COVID-19 Update: Dealership Trade Groups Ask Washington for Clarification on “Essential Business”

By Desiree Homer

Can You & Should You Be Open to Sell Right Now?

You may have been struggling to interpret the latest round of “essential business” permissions, and you’re not alone. Some dealers already have the direction to close their sales operations, including those in California, where the CA New Car Dealers Association has recently recommended that its members stall operations of 1,400 showrooms statewide. But many dealers are wondering how to interpret even these recommendations, along with definitions of essential business operations. A coalition of groups representing nationwide interests of dealers, sent a letter to the White House on Monday, asking for better guidelines and clarification on those parameters.

Monday’s Letter to President Trump

A letter, signed by the American International Automobile Dealers Association, National Automobile Dealers Association, National Association of Minority Auto Dealers, American Truck Dealers, and the Alliance for Automotive Innovation, arrived in Washington on Monday. The sentiments expressed offered appreciation for the previously outlined guidance regarding the classification of essential services. The President made it clear that dealerships were to be considered as essential businesses, with permissions to remain in operation. However, there isn’t specific language to address the difference between sales and leasing from parts and service. This is the gray area for which this coalition of associations is seeking definition.

States Making Their Own Determinations

It may have been an intentional move by the President, but the open-ended language provided for the automotive industry has prompted many states to make their own recommendations. In New Jersey, for example, the state’s 500 plus dealerships have closed their showroom doors but remain open for business in parts and service. Similarly, in Michigan, Governor Gretchen Whitmer has outlined that while repair and maintenance services are essential, auto sales is prohibited statewide as part of the shelter-at-home orders.

Vehicle Sales Is Still Essential for Some

The Ohio Automobile Dealers Association believes dealers should be permitted to both sales and service. Nashville, Tennessee, recently issued a stay at home order for its residents but outlined essential automotive services to include sales, service, and maintenance. Being open for service doesn’t necessarily mean these dealers have more foot traffic than others. Car buyers are sheltering in place. So, most who had plans to buy vehicles, have put those plans on hold. Dealers who remain open for sales and leasing now are essentially making themselves available to help those consumers who have an immediate or emergency need for a replacement vehicle.

Regional Decision-Making Best Practices

Whether or not you’re open for sales right now may entirely depend on your regional impacts of the virus and statewide orders. It’s clear for now that service bays are open for business and ready to assist those consumers who need their cars for transportation. As a dealership owner, you may determine on your own that selling right now doesn’t make sense for your market, even if your state allows sales. Remember, any restrictions on commerce is intended to be temporary. Sales transactions not happening today will more than likely be taking place in the coming weeks. Adopting a safety-first plan in compliance with your community efforts may be the best business decision.

Perspective during these quarantine orders and shelter-at-home recommendations is key. Any government-issued rules that affect your dealership are affecting all of the dealerships in your market. Keep the service bays open and continue communicating with your local audiences about every step you’re taking. The federal government may respond to this recent letter and weigh in with more precise definitions for separating sales from service. Until then, doing what’s best for your customers and employees may fall to you for interpretation.