If any company is bracing for the shock of falling U.S. auto sales, it's got to be Group 1 Automotive. The company owns and operates 186 auto dealerships along with 242 franchises and 49 collision centers, mostly in the U.S. and U.K.
And on Wednesday, the company provided a business update: the outlook for the industry was catastrophic, to say the least.
As a result of the coronavirus lockdown and beginning on March 6, the company said that overall U.S. vehicle sales volumes began to significantly decrease, and are currently down 50-70 percent from normal expected March volumes. Additionally, the company said that based on discussions with its OEM partners, this sales decline is consistent with that experienced by other dealers.
"Virtually all of Group 1's U.S. dealerships are located in markets operating in some type of 'shelter in place' or restricted travel environments in accordance with applicable state and local orders," the company said in its release.
The company also said it was seeing a similar pattern in the U.K., where it was having a good March prior to the coronavirus lockdown. "Order take in recent weeks declined by approximately 50 percent," the release said.
And like many other companies, they are being forced to take drastic steps to try and shore up their business during this difficult time. Among other things, the company has been forced to furlough 3,000 U.S. operating and staff employees for a 30-day period with an option for a second 30-day period and furlough 2,800 U.K. employees for an initial period of 21 days, which equates to about 90 percent of the Company's U.K. workforce.
Additionally, they are implementing reduction of corporate compensation, including reductions in salary of 50%, 35%, 20% and 15% for the company's CEO, President, SVPs and Corporate Vice Presidents, respectively.
Earl J. Hesterberg, Group 1's president and chief executive officer said: "The sudden impact of this medical and human emergency is clearly disrupting most businesses. This is requiring us to take many severe and regrettable actions to re-size our business to minimal activity levels in the near term. I believe that the swift and decisive actions that we are taking will enable us to recover quickly when the market recovers as it undoubtedly will."
If Group 1 acts as an accurate barometer, which we believe it will, we not only expect carnage in the auto industry for March, but also for the economy in general as macro numbers begin to trickle in. Given that lockdowns in many key areas are expected to continue well into April, Group 1's difficulties and today's historic jobless claims number could be only the beginning.
By Zerohedge.com
