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Considerations for auto dealerships during COVID-19


While automotive retail has been deemed an essential service amid government-mandated COVID-19 shutdowns, social distancing and the economic halt have significantly affected revenue and operations for dealerships across the country.

The decisions you make for your business now could be crucial in determining the long-term impact once the coronavirus crisis has subsided.

This checklist outlines key considerations to help you lead your dealership through the coming weeks and months.

Business risk

Think about what is keeping you up at night and develop action plans to minimize the impact, such as:

  • Review your business continuity plan. Does it address responding to a pandemic?
  • If not, work with your leadership team to adapt your plan.
  • Assess your financial, operational, and market risks. Not all brands and buying groups will be affected by the crisis in the same way—the impact may vary by individual dealership.
  • Perform a financial stress test of your business plan and financial forecasts. Focus on your P&L and financial statements.
  • Consult your IT team on the dealership’s cybersecurity strategy. Is the business protected against heightened cyber risks during COVID-19?
  • Create a business improvement plan that addresses strategies for financial recovery, post-COVID-19.

Cash flow and liquidity

Cash flow and liquidity are critical for dealerships; a plan should address the next 30, 60, and 90 days.

  • Assess your P&L statement. Which costs and expenses are essential? Which can you reduce, put on hold, or eliminate?
  • Review tax payment and filing deadlines, including recent relief measures that address payment deferrals or exemption increases.
  • Review your banking relationships. Are there opportunities for loan deferrals or restructuring?
  • Leverage government programs and subsidies where eligible, such as the Canada Emergency Wage Subsidy (CEWS).
  • Consider tax planning measures, such as an estate thaw and refreeze, or loss utilization/loss carrybacks. An experienced advisor can help you understand the rules and implications of these tactics.
  • Establish and track key performance indicators (KPIs) to measure borrowing and liquidity metrics (e.g. weekly cash flow forecasts, customer and supplier assessments, etc.). Assess these against your business plan and long-term forecasts.

Managing your workforce

The health and safety of your employees is paramount. Consider these steps:

  • Review and update workplace policies (such as health and safety and cybersecurity) to incorporate new compliance measures and guidelines for responding to the pandemic.
  • Create and implement an employee communication plan that provides up-to-date, accurate information on new developments related to the crisis.
  • Be clear and consistent in your messaging, and address employee questions and concerns.
  • Ensure all dealership staff understand their roles in responding to the crisis and are trained on any new procedures, such as social distancing, vehicle sanitization, or enhanced cybersecurity protocols.
  • To mitigate layoffs, consider applying for the federal government’s Work-Share (WS) program.

Stakeholder engagement

Take a proactive approach with your stakeholders, to help manage the impact of the crisis on your dealership.

  • Identify the key stakeholders related to your dealership, such as your C-suite team, board of directors, lenders, government agencies, OEM, and suppliers.
  • Assess each stakeholder’s agency. Develop proactive management plans that state an ‘ask’ for each one, such as a request to the bank for a delay on principal payments.
  • Develop and implement a holistic communication approach. Clearly communicate the path forward for your dealership and the impact to all stakeholders.
  • Look ahead to post-crisis engagement. For example, begin working with your OEM on strategies for regaining consumer confidence once the COVID-19 crisis has passed.

How BDO can help

Our automotive industry team understands the challenges your dealership is facing during this time. We are proactively monitoring new developments as they unfold, to help you adapt and respond to the crisis and prepare your dealership business for the future.

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