North America is bracing itself for recessionary conditions directly related to the stay-at-home orders associated with COVID-19. Nearly 22 million workers have filed for unemployment compensation in the past month, with six of the most highly impacted sectors being Restaurants and Bars, Travel and Transportation, Entertainment (i.e., casinos and amusement parks), Personal Services (i.e., dentists, daycare providers, barbers), other sensitive Retail (i.e., department stores and car dealers) and sensitive Manufacturing (i.e., aircraft and car manufacturing), according to the U.S. Bureau of Labor Statistics.
This has caused a ripple effect, with dramatic declines in consumer confidence and spending. “The economic contraction in March and Q2 will be worse than at any point since WWII. The consensus forecast now expects 3.1% annualized contraction in real GDP in Q1 and 25% in Q2,” explained Manheim.
As Greg Johnson, CEO and Co-President of O’Reilly Auto Parts said, “We are living in highly uncertain times and cannot predict how long the current crisis will last or how severe the impact will be to our customers and our business,” but difficult times define character—and the automotive industry sure has a lot of it.
Automakers, retailers, restylers, distributors and aftermarket manufacturers like VP Racing Fuels, Mahindra Automotive North America (MANA), Champion Brands, Rigid Industries, Oracle and many others have joined forces during these challenging times—choosing to devote their talents and resources by supporting local communities across the country in the fight against COVID-19.
Recently, the U.S. reported a decline in daily new COVID-19 cases and, as such, “Consumer sentiment improved modestly for most of the last week. Americans are starting to receive payments from the stimulus. Vehicle sales declines appear to be past the bottom,” added Manheim.
What Industry Professionals Are Saying
• “This virus was a shock to us all. It recognizes no borders and every part of the puzzle has been hit. Shelter-in-place caused everyone to reinvent how to survive and fortunately, many of us considered ‘essential businesses’ were able to reinvent strategies to keep everyone safe and productive as possible,” said BJ Lease, North American Sales at NAADE, Inc., parent company of Go Rhino and Big Country. “As a world-wide supplier based in Mexico—under the same strict guidelines—we had to adjust, conform and continue to supply product. During this time, we reallocated some resources to add extra effort to build, train and prepare for the future,” he continued. “It’s been said ‘This too shall pass,’ and we believe in the power of resilience. It may take time, and it may be different, but WE GOT THIS.”
• “Warn Industries is certainly experiencing the effects of this global pandemic. Our thoughts and well wishes go out to those who have contracted the virus and to the health care professionals all over the world for all that they continue to do,” said Kyle Shiminski, vice president & general manager of Warn Industries. “Warn remains open and continues producing to meet our customer commitments, many of which are essential businesses. We are focused on the health and safety of our team and each of their family members.” he continued. “None of us know how long this situation will last, but we are in this together and will continue to be there through the difficult times and we look forward to what the new normal brings.”
• “Our customers and the communities we serve have been and continue to be severely impacted by COVID-19, and our top priority has been to protect the health and safety of our customers and our O’Reilly Team Members,” stated Greg Johnson, CEO and Co-President of O’Reilly Auto Parts. “Our experienced team of professional parts people has a long history of selflessly responding quickly in disaster situations to take care of our customers, and I’m extremely proud and grateful for the contributions of our entire team to keep all of our stores open and operating to meet our customers’ critical needs in the face of the COVID-19 crisis,” continued Johnson. “Some of the initiatives we have implemented to serve our customers in the safest way possible include the implementation of curbside pickup for Buy Online, Pick Up In-Store orders and revised procedures for store services, including battery and check engine light testing. Our core Culture Value of excellent customer service remains as critical as ever, and we will continue to adapt to the ongoing challenges to safely take care of our customers and provide them the essential parts they need.”
• “During the uncertainty in the current marketplace caused by COVID-19, we at TrailFX are staying focused on improving internal operational efficiencies as we continue to manufacture and ship products while adhering to all state and local recommended guidelines. We are responding to the evolving needs of our retail partners and are hopeful that the long-term impact to the aftermarket will be minimal,” said Jane Donnelly, LKQ Specialty Products Group.
• “4 Wheel Parts (4WP) is doing its part to help first responders by offering free inspections, alignment and tire rotations to all first responders, medical and essential workers at 4 Wheel Parts installation locations through May 31st. The last thing we want these heroes worrying about is their ability to get to the front lines, and 4WP is proud to serve those in need at any of our 95 facilities,” said Kathryn Reinhardt, Senior Marketing Manager at 4 Wheel Parts.
• “With this pandemic, our sales went to almost nothing overnight. Once the mandate came down for essentials only, we made the difficult decision to close the doors because even though we could qualify as essential, our business model and the accessories we sell really aren’t,” said Josh Poulson, owner of Auto Additions in Westerville, Ohio. “All personnel except our accounting controller were transitioned to unemployment, but we still provided health insurance and assisted team members wherever we could,” he added. “Ohio is preparing to lift stay-at-home orders and businesses will begin opening as of May 1st. I’m confident the dealerships we service will be back up and running at full capacity soon—my prediction is that Q4 will bring some normalcy,” he added.
• “People and the industry at large have been impacted, yes, but make no mistake: auto enthusiasts across the country are using this time to dig into vehicle projects they previously didn’t have the time to tackle. So, while retailers may be struggling right now given necessary social distancing measures, data shows that online automotive parts and accessories are strong,” said Billy Longfellow, VP of Design at Air Design USA. “Remain hopeful, we will bounce back together—here at Air Design USA, we’re already seeing revival in certain regions. I expect a resurgence come summertime,” he added.
• “Certainly, the effects and disruption due to coronavirus are being felt. What we do now in the coming days and months will pave our unforeseen future. We feel the best thing we can do is shift gears. By focusing on innovation, building things that matter and stepping out sideways with alternative sales and marketing efforts, we can sustain and carve out new opportunities,” said Micah Anderson, Brand Manager at T-REX Truck Products. “Optimistically, we have better times ahead, and I am confident T-REX Truck Products is here for the long haul. When the machine gets turned back on and is running wide open at full throttle, we will see an economic rise like no other. It is critical to be well positioned once it is go-time,” he added. “Right now, we all need to take a moment to appreciate the things we have, strengthen bonds within our local communities and support our industry network.”
• “This pandemic is having an impact of monumental proportions on our lives and businesses. We have prioritized the health, safety and well-being of our employees, customers and suppliers and taken actions in alignment with guidelines from CDC, WHO, and OSHA. In addition, we’ve put some specific measures in place to provide direct support to our customer base. First, a comprehensive resource center that highlights best practices across various industries—tips, webinar information, federal guidelines (what is available to small businesses, how to apply), etc.,” said Harneet Kaur, marketing director at Keystone Automotive Operations, Inc. “It’s important for our customers to feel they have a reliable place to go, a single source for the overwhelming amount of information out there. We are committed to keeping the resource center up-to-date,” she added. “Second, many states consider our customers’ businesses essential because of their ability to keep drivers on the road, but many are small operations that are limited in size and scope. Add reduced personnel to the mix and finding the time or words to market themselves during this situation can be very challenging, so we created a few plug-and-play marketing templates that let them easily insert their personal information and share with their customers,” explained Kaur. “In addition, we are using our social media to promote automotive shops and aftermarket suppliers who are open for business—that way local customers who are exposed to the messaging know about essential services and products available in their areas.”
Hopeful is certainly the underlying tone. In a recent survey conducted by SEMA, nearly 90% of 2,000+ participants responded that they are impacted short-term, but will get through it or are business as usual. “Bottom line, the specialty-equipment industry is open for business,” emphasized Kyle Cheng of SEMA.
As the economy prepares to do business in a post COVID-19 world, the Alliance for Automotive Innovation and Original Equipment Suppliers Association has published guidelines and best practices for creating a safe working environment and Lear Corp. made a 51-page “Safe Work Playbook” public. The detailed document addresses everything from advanced social-distancing practices to on-site health screening, employee training, sanitizing the workplace and providing personal protective gear like masks, face shields and gloves.
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