Canadian dealers want government assistance ‘before it’s too late’

The Canadian Automobile Dealers Association is urging Ottawa to “speed up” financial assistance for its members as they battle to survive widespread government economic shutdowns prompted by the novel coronavirus pandemic.

Dealerships are having to make tough decisions about how to sustain their business, keep their staff employed, and financial support needs to be immediately available, CADA economist Oumar Dicko said in a statement posted on the group’s website. 

“Access to support in three to four weeks may be too late for some of the businesses. It may not have the intended effect the government is trying to do for the economy.”

While Dicko applauded the government’s C$82 billion ($56.5 billion US) package to help support individuals and businesses affected by the crisis, he said the government needs to act quickly to distribute the money so that it can have an immediate impact.

“COVID-19 is a serious health crisis, but it is also having a devastating economic impact. Many sectors of the economy will be hit hard, including the automotive sector and dealerships,” he said. “At CADA we understand that. Our focus right now is to ensure long-term business continuity in the sector.”

Parliament reconvened Tuesday in a bid to approve the financial package.

In the longer term, CADA, which represents more than 3,000 new-vehicle dealerships, said it wants to work with governments on a plan to help stimulate the economy once the crisis subsides.

The most current statistics compiled by DesRosiers Automotive Consultants, show that employment at automobile dealers grew 2 percent with 161,400 employees on average working from January-September 2019 compared with the same period in 2018.

Meanwhile, Canadian Black Book (CBB) is forecasting a sales downturn whose severity will depend on the length of the governments’ social distancing policies.

In the “mild recession scenario,” negative GDP growth in the first three quarters of the year will cause a “significant drop in consumer confidence and a large increase in unemployment. This will result in a 25 percent drop in new sales to 1.44 million units in 2020.”

In the “severe scenario,” a prolonged social separation policy, followed by a deep recession, new sales are expected to fall by 40 percent to 1.15 million units in 2020, according to CBB.