- April 15, 2020 - Import Vehicle Community - Executive Leadership Council Discusses COVID-19 Impacts
April 15, 2020 - Import Vehicle Community - Executive Leadership Council Discusses COVID-19 Impacts
We are all doing our best to navigate these unchartered waters. Our auto care industry, and the business community as a whole, has been impacted by this historical event. Knowing that these times call for new and innovative ways to share information, last week the Import Vehicle Community Executive Leadership Council participated in a roundtable discussion to talk about the impact our industry is experiencing and how our businesses are trying to adapt to these challenges.
We aren’t here to pretend that we have the answers, but wanted to share these key takeaways with you. We hope your challenges today will be met with new opportunities tomorrow.
In March, the COVID-19 focus centered around supply chain disruptions in China and identifying solutions to minimize our business impact here in the United States. However, just a few short weeks later, COVID-19 rapidly made its way across our borders and became a global pandemic. Suddenly, businesses were forced to quickly pivot their attention to ensuring the health of their employees, while at the same time support the U.S. transportation infrastructure as an essential service.
While the long-term outcome of this pandemic is unknown, our industry, like many others, is feeling the FINANCIAL IMPACT in the immediate term. Reduced production and demand and the inability for customers to pay on time is slowing down cash flow and shrinking cash reserves. Teams are being split up over multiple shifts resulting in production inefficiencies, increase in overtime and hazard pay. One member shared a concern as it relates to the risk exposure and liability in continuing to operate. On the brighter side, a few Auto Care members who applied for PAYMENT PROTECTION PROGRAM (PPP) loans have received funding.
MANUFACTURING MEMBERS have reported a decline in sales and budget cuts but sales teams are staying productive by participating in educational trainings on product lines as well as continuing to talk to those farther down the supply chain to learn as much real-time information as possible.
The situation in CHINA has improved significantly since March with most factories now up to 70+% capacity. The immediate challenge most are facing is access to the network of smaller sub-component manufactures and helping them get back online.
U.S. PORTS remain open coast-to-coast, keeping supply chains and cross-border trade flowing. Importers should be aware of containers stacking up at the terminal and being assessed detention fees for containers refused due to space constraints.
DISTRIBUTION MEMBERS are reporting declining inventory on various brands and forecast depletion of some items due to temporary or permanent vendor closures. The larger impact, however, will be felt later in the year when inventories at the core manufacturers are drained and slow to replenish.
SHOPS are currently operating with skeletal crews and reduced hours. Even though the industry is recognized as an essential service and allowed to operate, most installers report that business is slow as overall travel across the country has declined.
A troubling observation is the impact being experienced by those shop owners on the glide path to retirement in the next few years, who may be closing their doors for good due to negative cash flow for the next six to 12 months. This may result in the industry overall experiencing an unexpected decline in shops reopening after the situation normalizes.
As we continue to push through this dynamic situation, there is LIGHT at the end of the tunnel. Members are starting to think about steps they will be taking to re-engage with customers and be ready to quickly ramp up delivery of products when the economy begins to emerge from the shut-downs. Now is the time to strengthen relationships with our channel partners and together take steps now to ensure everyone’s survival and eventual recovery in the coming weeks.
We will continue to monitor and share our findings as things continue to develop. We welcome your feedback and questions if we can help in an anyway. Although you’ve heard this many times over by now, and there’s no better way to say it: we're all in this together.
Wishing you all good health.
The Auto Care Association is keeping a close eye on current market trends through our TrendLens™ platform and is interested in hearing how your business is navigating the current state of affairs. You can help by taking this anonymous, quick, three-minute survey on the impact.
Look for results from the survey as well as a host of interactive industry and economic indicators coming soon on TrendLens™.
Questions or other feedback? Email our community liaison, Angela Chiang and let us know how we can help.
Take the Survey
Industry Data Resources and Implications
Thursday, April 16, 2 p.m. ET
This webinar discusses the top data points that Auto Care is keeping a close eye on at the moment and what these data points might mean for the industry. Key takeaways include:
- An overview of the data and industry research resources Auto Care has for members
- A look at key data points industry experts are watching
- Discussion on what these key data points might mean for the industry
- Michael Chung, Director, Market Intelligence
- Scott Howat, Business Development Executive
Impact on China's Automotive Industry and Global Supply Chain
Tuesday, April 21, 10 a.m. ET
This webinar discusses the impact of COVID-19 on China’s automotive industry and global supply chain. Key takeaways include:
- Current impact on sales, product and overall market growth
- Impact on the global supply chain from deep reliance on China as a source for automotive components
- A longer view on opportunities in the “new normal” industry value chain
- Bill Russo, Founder & CEO, Automobility, Ltd. and AmCham Shanghai’s Automotive Committee Chair
Mexico Declares Auto-Repair and Supply as Essential Business
On April 8, 2020, Mexico issued a new agreement (Spanish / Unofficial English translation) clarifying the essential activities under the COVID-19 National Health Emergency previously published on March 31, 2020.
The new agreement recognizes auto-repair and auto supply as essential businesses under Section B, Sub Section III (I):
The essential activities included in the Health Emergency Agreement are within the scope of the Secretary of Communications and Transportation, are the following: III. (i) Vehicle fleet maintenance services, supply of spare parts and related services.
Mexico Agreement 4/8/2020
Coronavirus and the Aftermarket
The Auto Care Association has developed a resource page to help our members navigate these unprecedented times, including:
- Links to official resources
- Federal, state and local government guidance
- Upcoming and past webinars
- Operation resources
- Market Insights
This page is updated frequently, please check back periodically for the latest information.
Have a helpful resource to share with the industry? Let us know.
Coronavirus Resource Page