As spring arrives, automobile dealers normally enjoy their busiest time of the year.
Customers flock to car lots in the sunshine to peruse, test drive, and buy new vehicles.
But not so much this year.
Sales and service of vehicles in Minnesota has slowed as potential customers hunker down at home due to COVID-19 concerns.
Business has slowed so much that some employees have been laid off.
“What I’m hearing from dealers across the state is that service business is pretty steady, but sales business is down from a year ago,” said Scott Lambert, president of the Minnesota Automobile Dealers Association (MADA). “There’s an obvious concern about a lack of business.”
Nationally, Fiat Chrysler, Ford Motor Co., General Motors, Honda, and Toyota have halted vehicle production in response to the virus.
To stimulate new vehicles sales, some automakers are offering low or zero percent financing up to 84 months and deferred payments.
But with a nationwide economic slowdown and millions of people out of work, even that may not be enough to attract more customers.
Normally, from mid to late March, we see people come in who have a desire to buy,” said Lambert. “Most of the people who are coming in now are people who want or need to buy. They’re people who need a car or people whose current lease is up. We’re finding that the people who are buying are people who are more needful.”
In Eveleth, Lundgren Ford President Bruce Lundgren says he’s never seen business so sluggish.
So slow, in fact, that the 91-year-old, fourth-generation dealership has been forced to layoff service personnel.
“It stinks,” Lundgren said of the layoffs.
Despite going the extra mile in offering convenience services, customer traffic is quiet, said Lundgren.
“We’ve offered to go get them, deliver them and sanitize them,” Lundgren said of customer vehicles. “But not a lot of people are taking us up on it.”
Over its years on the Iron Range, Lundgren Ford, like other Iron Range businesses, has experienced plenty of regional, national and global economic upheavals due to the cyclical iron ore industry.
But nothing like the current situation, said Lundgren.
“We’re never seen anything like this,” said Lundgren. “I don’t know what to make of it.”
If non-essential Minnesota businesses are closed, Lundgren says he believes auto dealerships would remain open.
“It’s my understanding that automobile sales and service would be deemed essential,” said Lundgren. “But if everybody is staying home, big deal.”
MADA has petitioned Minnesota Governor Tim Walz and President Trump to ask that the state’s auto dealerships be considered essential should Walz order non-essential retail businesses across the state to close, Lambert said in a MADA video.
In Hibbing, Ranger GM Vice President Charlie Hilligoss says the dealership and industry will get through the downturn. Meantime, it’s affecting everyone, said Hilligoss.
“We’ve definitely seen a downturn in sales and service,” said Hilligoss. “Our service department still has work, but some people have called and canceled service work.”
Like other dealers, Ranger GM is taking extra precautions in cleaning, sanitizing and practicing social distancing, said Hilligoss.
“We are doing everything we can,” said Hilligoss. “We even have a program with GM where people can buy a car online and we will deliver it. People more than I’ve expected are coming in. But if people are losing their job, it’s tough.”
At the Waschke Family of dealerships in Virginia, Cook, and International Falls, sales and service are “a little light,” compared to last March, said Kerry Waschke-Collie, general manager.
However, the slowdown has so far not been devastating, she said.
“Business is still going,” said Waschke-Collie. “Transportation is critical, but we do have some people waiting to do lube and oil and filters.”
Financial and payment incentives have spurred some customers, said Waschke-Collie.
However, the market can change daily, she said.
“We’re watching all of the events unfold,” said Waschke-Collie “We just want to be conscious of the safety and health of our employees and our customers.”
Six iron ore plants in northeastern Minnesota produce iron ore pellets. Iron ore pellets are the primary ingredient used to manufacture steel. A precipitous downtown in new vehicle sales across the nation could impact steel producers and iron ore plants.
“I know people who work at U.S. Steel who are worried,” said Lundgren.
Statewide vehicle sales numbers for March are not yet available, said Lambert.