Go to the Facebook page for Birmingham’s Adamson Ford, and you’ll see standard promotional shots of dealers and customers posing in front of newly purchased vehicles.
But in some photos, both the salesperson and buyer are wearing masks - yet another sign of how the marketplace has changed due to the coronavirus pandemic.
Auto dealers all around the state have taken similar steps in response to both the COVID-19 shutdown and the reopening of Alabama.
“We would like everyone to know we can accommodate any and all situations,” Chris Charles, general sales manager for Adamson Ford, said. “We are providing a safe environment, and if they don’t feel comfortable coming in, we are continuing to improve our online experience.”
Tom Dart, president of the Automobile Dealers Association of Alabama, said auto sales in Alabama are not back up to where the industry was prior to the pandemic, but it is "pretty good’ compared to this time last year. In 2019, Alabama had 271 new car dealerships, with $12.7 billion in sales, according to the National Automobile Dealers Association.
“This year started out great until the middle of March, when we hit a wall, like everybody,” Dart said. “But businesses were able to remain open because we were consider an essential business.” Auto dealerships stayed open because of the continued need for transportation and vehicle maintenance for essential workers.
As at other dealerships, Adamson Ford’s sales staff quickly transitioned to online sales. The dealership already had an online presence and had been working to improve it before the pandemic "because it’s not going to go away,” Charles said. But the work went into making as much of the transaction online as possible, with non-contact service and home delivery of the vehicle.
But as people largely stayed home in April, they didn’t shop for new cars. Auto sales for most manufacturers sank by almost half that month, but were down only about 30 percent in May. Used car sales recovered faster, analysts say. According to Cox Automotive, new vehicle sales for the week ending May 28 were down 28 percent from the previous period last year, but used vehicles were up 6 percent. Online used-car seller Shift said its sales rebounded to pre-pandemic levels by late April.
Then Tuesday, the Census Bureau said retail sales surged 17.7 percent in May from the previous month, a record increase. Auto and auto parts sales rose 44.1 percent from April, the bureau said.
Jennifer Whisenant, executive director of the Birmingham Automobile Dealers Assoc., said the last part of March and April were “tough for everyone.” Dealerships were forced to get creative.
Customers were brought in by appointment only to keep the number of people inside the dealerships down. Customers were allowed to bring cars home for test drives. Sales paperwork largely transitioned online.
Sales figures from the automakers themselves through May show the industry is recovering nationally. Hyundai announced it sold 57,619 vehicles in May, which was a drop of only 13 percent from the previous year, better than the industry predicted. Honda sold 110,636 vehicles in May, a 16 percent decline from 2019, but sales of the Passport made a slight gain from the previous year.
The picture on other automakers will be clearer when quarterly figures are released. It’s unclear if the federal stimulus payments played a role in sales. Charles said he didn’t think the checks had any effect from his perspective.
With the return of customers, the showroom and sales lot is a different experience. Charles said sales staffers at Adamson Ford wear masks and adhere to social distancing guidelines. The showroom is sanitized several times a day.
Dart and Whisenant said the only major issue with dealers currently is lack of inventory, something that’s being seen nationally. Most auto companies experienced some kind of production shutdown related to COVID-19 during the spring. Alabama’s auto manufacturers - Mercedes-Benz, Honda, Hyundai - all shuttered their plants and suspended production for part of March and most of April.
With near-record unemployment and fears of a prolonged recession due to the pandemic, shoppers might be expected to flock to used cars. Charles said he has seen used cars sales rebound faster than new cars.
U.S. Census Bureau data showed that the fall in retail car sales caused a drop in dealer wholesale prices for pre-owned vehicles. However, that drop hasn’t quite made it all the way to the sales lot, according to one analysis.
CoPilot, a car shopping app, says used car prices in Alabama have dropped 2.69 percent during the pandemic. By contrast, Atlanta has seen a 4.92 percent drop, while dealerships in the Miami-Fort Lauderdale-West Palm Beach have seen prices fall 6.59 percent. The uneven price drops likely reflect places where dealers did not buy up new inventory, and as a result, aren’t rushing to cut prices.
There are other positive indicators for the industry. PureCars, an automotive dealer advertising and technology provider, said many dealers nationwide have started ratcheting up their advertising to pre-pandemic levels. Ad spending is up in YouTube ads more than 20 percent, and up more than 8 percent for Google Search.
Dart said the demand for vehicles could rise following the lockdown for several reasons. For one, surveys show Americans are less likely to feel secure riding public transportation during the pandemic. At the same time, the average age of vehicles on the road in Alabama is 13 years old, almost two years more than the national average.
“We don’t expect this year to be as good as previous years, but really, who knows what’s going to happen?” he said. “The numbers have so far been better than what we feared in March.”
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Alabama’s car dealers see demand picking back up after lockdown - AL.com
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