Dealerships see new customer behavior during pandemic
Managers of local car dealerships have seen their customers’ behavior change during the pandemic.
At the onset of COVID-19, dealerships struggled.
“When COVID first hit in March, the first month or two slowed down a bit. That’s when we cut back our staff to about 50%,” said Brian Terp, general manager of Bunnin Chevrolet Cadillac in Santa Barbara.
According to Edmunds, an online automotive resource based in Santa Monica, April saw a 53% decrease in auto sales compared to April 2019. It was a 30-year low for the industry.
Hoping to coax buyers back, manufacturers offered 0% interest-finance deals. It’s the highest level of 0% deals since 2004, Edmunds reported in a news release.
“Right when everything started, (deals) got aggressive,” Mr. Terp said, noting the financing of deals with no interest for seven years and no payments for months. “It seemed like everyone was trying to find a solution to help everyone out.”
In the spring, many manufacturing plants shut down, and workers contracted the virus. The production slowed way down — which became a problem when demand increased.
“There is less supply,” Bill Fogg, general manager at Santa Barbara Auto Group, said. “(Manufacturers) are trying to gauge the demand so when they had problems back at the beginning of the year with plant shutdowns and manufacturing issues, it does take a while to refill the pipeline.”
Because he sells luxury vehicles, a lot of his customers order custom specifications and wait for the car to be delivered. His clients who are receiving cars now could have ordered before the pandemic, depending upon the make and model of the car.
He said foot traffic has been down this year but online sales have increased.
Mr. Fogg estimates this year’s sales to be 75-80% of last year’s. He’s content with the outcome because he has kept 150 employees throughout the pandemic.
“That’s the goal: Keep everybody employed, happy and healthy,” he said.
Mr. Terp has started to hire some of the employees he let go in the spring, but he said sales are comparable to last year even with less staff.
“I don’t think as many people are stepping on the lot. They’re mostly doing it through the internet,” he said.
Customers from all over California called in orders to get delivered to their home. Inventory is currently his main roadblock to making the sale.
“Dealers are doing everything they can to make it happen,” he said.
The service department slowed down as people stayed home and put fewer miles on their cars, but he said it has recently increased with holiday travel.
Not inhibited by manufacturers, Mission City Auto Center has had a great sales year, said owner John Mullins.
“We haven’t really found that the pandemic has affected our business at all. Zero,” he said.
The current legislation affecting him most is the statewide elimination of diesel engines. Perturbed by the taxes, many diesel owners have come to Mission City Auto Center to switch to trucks with standard gasoline.
He didn’t notice a change in the number of people financing their purchase.
Edmunds projects just a 5.7% decrease this quarter from the fourth quarter of 2019.