Car manufacturers across the industry reported an enormous drop in sales over the last month because of the coronavirus outbreak.
That drop in demand puts enormous pressure on local car dealerships, which are independently owned. In Tennessee, car dealerships are considered essential services, and many dealerships remain open. Local owners are using technology and extra cleaning protocols to keep their businesses running.
Mitsubishi, which recently moved its North American Headquarters to Franklin, reported a 52% drop in U.S. sales between March 2019 and March 2020. The company reported a 15% drop in sales for the first three months of the year.
Nissan, which also has its North American headquarters in Franklin, reported an even larger drop: nearly 30% for the first three months of the year. Other car manufacturers reported similarly dismal numbers.
As the virus has spread across the globe, it has also disrupted supply chains. Nissan shut down all U.S. manufacturing, including the plant in Smyrna, on March 18. Those U.S. plants will remain closed through late April, with some business-essential work continuing with extra safety measures.
Recently, Nissan decided to lay off thousands of workers in the U.S. because of low demand. It hopes to rehire workers later this year.
General Motors shut down all North American production facilities in March, including the plant in Spring Hill. GM's sales numbers fell by more than 7% last month.
Jeremey Barnes, a representative for Mitsubishi, said the company has stopped manufacturing cars for the U.S. market in response to low demand, and because the supply chain has essentially shut down.
“The demand has gone to near zero on a global basis because this is happening all over the whole world. Everybody is staying home,” he said.
In Williamson County, many car dealerships remain open, but few customers are walking through the doors.
“We were having a very good quarter coming into March, then things changed substantially,” said Nelson Andrews, who owns three luxury car dealerships in Brentwood. “I can't tell you what April is going to be like, but for the most part we don't have a lot of people coming by and kicking tires.”
Many dealerships already offered online shopping for customers. Nelson said his dealerships can complete about 95% of the buying process online. The difficult part is that many people aren’t totally comfortable buying a car without meeting with someone in person.
“Customers prefer to sit with a salesperson, have a conversation and do it that way,” he said. “Most people are accustomed to do it as a personal, relational conversation.”
Paul Huber is the director of technology for Nissan Cool Springs and Hyundai of Cool Springs. While the state has deemed car dealerships essential, Franklin told dealerships to close their showrooms. Service departments at dealerships can stay open.
"We can sell cars, we just can't have people in the showroom," Huber said. "It's like curbside to go with restaurants. We're doing the same thing with car sales. We've got a table and chairs set up outside the dealership ... We do the paperwork outdoors with the customer.”
Most customers last month picked out a car online. When they come to the dealership it’s waiting for them. Huber said workers from the detailing department clean and disinfect it thoroughly ahead of time. A salesperson does a walk-around with the customer, and then they take it for a test drive alone.
Customers can also request that dealerships deliver the car to their home. In that case, the only interaction between a salesperson and a customer is picking up the keys. Hubuer said more Hyundai chose that method.
Huber said Nissan of Cool Springs sold about 60% of the normal volume for March, which is usually a busy month for Nissan dealerships. Over the last weekend, the dealership delivered 15 cars.
“The process itself is really not a challenge at all,” he said. “The biggest challenge right now is people out of work ... So many nonessential people, especially those that work for small and medium sized businesses, a lot of people were laid off.”
Andrews and Huber said they’re glad that they can still stay open, offering work for employees and service for customers. They said it’s important for car businesses to stay open because people still need to get to pharmacies, grocery stores and other essential services. In Williamson County that means driving.
While the numbers for March are bad, Barnes said Mitsubishi is expecting demand to come back eventually. After consulting with industry analysts, the company believes it can recoup some of the losses from last month.
“We do think there is a big amount of pent up demand, that customers will go back to the market. They won't say, well, we're not going to buy a car this year,” Barnes said. “Maybe you need a car, maybe your car has been in a crash.”
Still, it’s likely to get worse before it gets better. Car dealerships had nearly two weeks of more normal sales in March. Now, the sales side of nearly a third of Mitsubishi dealerships in North America are closed, and a similar number are open by appointment-only.
"Just wait until you see next month,” Barnes said. “Next month is going to make 50% look like a walk in the park.”