Imagine there is pent-up demand for a product you build, but because your factories have been dark, your supply chain is missing a few links.

To make matters worse, now imagine your existing customers have been slammed with massive job losses and are struggling to pay what they already owe you. And it is all happening during a pandemic that has claimed more than half a million lives.

What are you going to do about it?

That is precisely the conundrum that hit the United States auto industry this spring, and manufacturers are going to great lengths to steer a new course.

After seeing sales drop by nearly 60% year over year in April, the industry is noticing signs of a steady recovery, with a 21.5% increase in sales from April to May, according to Vicki Giles Fabré, executive vice president of the Washington State Auto Dealers Association (WSADA).

She says the auto industry is out of “intensive care,” predicting that the recovery would continue this summer.

“Also, the fact that numerous factories are nearly back to pre-pandemic production levels, putting out much-desired trucks and SUVs, will help tremendously to cure low-inventory issues and meet pent-up demand,” she says.

Advertising

Since Washington reopened auto sales to the general public on May 6, the WSADA’s franchised dealerships have developed safety practices and protocols in their showrooms and in the handling of customers’ cars.

Alan Anderson, president of the Western Washington Toyota Dealers Association, says that dealerships are taking precautions and following all recommended guidelines in order to keep their employees and customers safe and comfortable.

“In a nutshell, customers can expect that we have less people at a time in the building and on the showroom floor,” Anderson says. “Pretty much everything we do now is appointment-based.” 

Before the pandemic, dealers were working to move more of the buying process online. Now, that effort has accelerated. 

“This has sped up the process [of moving sales online] for most of us,” Anderson says. “We try to reduce the amount of time a customer needs to be on the premises. We’ve put a lot of things in place to reduce time and keep our staff and our customers safe.”

Anderson says that Burien Toyota has added plastic partitions and ample signage to the showroom so that people are protected and adequately distanced. All employees and customers are required to wear masks. The showroom is disinfected daily, and the cars are disinfected before delivery to the customer or when they come out of the service department.

Advertising

“I’m more comfortable being in my showroom than in a grocery store or some other place with a lot of people right now,” Anderson adds.

Car dealerships are taking extra precautions to make sure showrooms and vehicles are clean and safe. (Getty Images)
Car dealerships are taking extra precautions to make sure showrooms and vehicles are clean and safe. (Getty Images)

Here’s a look at some of the ways other local automakers have responded to the ongoing COVID-19 pandemic. (This list is a sampling, and many dealers may offer programs not mentioned here. See dealers for more information.)

Ford: The Ford Promise program offers the ability to buy or lease an eligible Ford vehicle through Ford Credit. Then, if you face financial hardship due to a job loss, you can return it within one year of purchase. They are also offering 0% APR financing for 72 months. Some dealers offer test drives by appointment with home delivery of the test-drive vehicles. Some Ford facilities in Detroit have doubled as drive-up food pantries.

General Motors: Late fees were waived on loan or lease payments through May 31, with automatic lease extensions for one month. Home delivery of new vehicles is offered. The company is producing up to 50,000 masks for front-line workers per day at their Warren, Michigan, facility.

Hyundai: Online buying, warranty extensions and deferred payments are available, plus special incentives for health workers and first responders.

Advertising

Kia: Offering the Click to Buy online buying program with home delivery of new vehicles from select dealerships. They are also offering 0% APR financing for 72 months.

Nissan: Payment assistance and deferrals are offered, along with lease extensions. Any late fees incurred between March 13 and May 31 were waived.

Subaru: In addition to deferred payments and lease extensions, Subaru is offering advice for car owners about solving possible problems (battery drain, tire deflation) when vehicles sit unused for long periods of time, such as during a stay-at-home order.

Toyota: Shop and buy completely online at participating dealers. Zero-percent financing up to 60 months and 90-day deferrals are available. Some service departments offer no-contact drop-off and pickup. Toyota facilities have manufactured or delivered face shields, visors and other health materials to hospitals nationwide. The Toyota USA Foundation awarded $2.5 million in grants to national nonprofits.

Financing incentives aren’t new in the auto industry, but with dealerships almost unanimous in touting  lease extensions and deferred payment, the deals seem to be longer-lasting for the moment.

“Incentives, deals and financing rates are good right now,” Anderson says. “This is a good time. Manufacturers are hungry. Folks have a pretty good opportunity right now.”

But it won’t last forever, says James Houston, managing director of consumer lending and automotive finance for J.D. Power.

“These types of programs have been tools [original equipment manufacturers] have used many times over in economic downturns and for inventory control,” he says. “History shows us that automotive sales recover over time, and there will be less need to rely on these types of programs.”

Natalie Montanez contributed to this story.