CoVid-19 Industry Updates

CoVid-19 Industry Updates (73)

 

The Occupational Safety and Health Administration (OSHA), which last month released an enforcement plan in the wake of COVID-19, is now deploying its plan at auto dealerships.

Adam Crowell, president and general counsel of ComplyNet, said OSHA’s plan – called “Interim Enforcement Response Plan for Coronavirus Disease of 2019” – was ultimately formulated in response to workers’ concerns over several issues.

Those included the lack of personal protective equipment (PPE), lack of training over appropriate standards and COVID-19 illnesses in the workplace.

Crowell, during a webinar this month, said the above complaints seem to be the most common.

“OSHA is classifying businesses based on risk levels,” Crowell said, “whether it is a very high exposure risk job, a medium exposure risk job or a lower exposure risk job.”

The highest risk jobs include things like health workers or emergency response workers, Crowell said.

On the dealership side, it will depend on the job classification or type of work each employee does, Crowell said.

An office worker might be able to operate with proper social distancing protocols with no problem.

“However, your service department, your sales department, your porters or technicians getting into vehicles may fall into the classification of medium exposure risk jobs,” Crowell said.

An OSHA inspector will make a determination based on whether there is an imminent danger based on a complaint or based on the type of business.

“OSHA is saying this may warrant an onsite inspection,” Crowell said.

If a dealership has a cluster of coronavirus infections and it appears they haven’t done anything about it, then it might warrant an onsite inspection.

OSHA will also look at other types of complaints that aren’t an “imminent danger” situation and those may not result in an onsite inspection, Crowell said.

“I will warn you right now, OSHA has been going onsite to dealerships and saying, ‘Hey, we’re just coming to observe social distancing,” Crowell said. “There’s not a complaint, they’re just randomly coming in.”

In situations where OSHA doesn’t come in, the administration may hear of a complaint and reach out to the dealer. The agency may ask the dealer to do an internal investigation, then get back to OSHA with the results, along with documentation that supports the results.

Crowell said this request may be by FAX or email, but it will be classified as what’s called a “rapid response investigation.” This requires a response within five business days.

Dealers may be able to ask for additional time, but if they can respond in five days, they should.

“It’s not automatic that you will get the additional time,” Crowell said. “It’s within the discretion of the (OSHA area) director.”

If an agreement cannot be reached, OSHA has said it will conduct an onsite investigation, he said.

Dealers have to provide documentation of any type of corrective action they have taken, Crowell said.

“They are going to want to see that you’ve done what you said you were doing,” he said.

Crowell said OSHA will also request – at the end of the process – that the business post the letter it received from OSHA and post the response.

Plus, the business owner will be asked to sign a certificate stating they have posted those items and send it back to OSHA.

Crowell said OHSA wants to be assured that it’s been posted or provided to the business’s employees so they are aware of it, too.

If OSHA determines the business did not do what it was expected to do, it could trigger an onsite inspection.

Dealers should also get guidance from an attorney or compliance professional.

During an onside inspection, OSHA reps will ask for “all sorts of information,” Crowell said. “They might be asking for your policies, procedures and training records and your OSHA logs, that sort of thing.”

For serious violations, OSHA can levy fines of up to $13,500 per violation, Crowell said. Businesses have 15 days to contest the order. Repeat violations can result in a fine of $130,000+, even if the previous violation was a decade ago.

He added that the CDC recommends a written pandemic response plan and OSHA may ask for that. It may review your supplies for PPE and/or do a walkaround.

“You have a duty as an employer to provide a workplace that is free from situations you know about that could serious physical harm or death,” Crowell said.

Businesses have to provide a place to wash hands or provide an alcohol-based sanitizer (at least 60-percent alcohol) and use EPA-approved chemicals. The EPA provides a list at its website.

Dealers are also using Plexiglass and stickers/marks on the floor for social distancing, Crowell said.

Nearly 2/3 of dealers surveyed by the National Independent Automobile Dealers Association recently reported they have begun the process of bringing back employees they had previously laid-off or furloughed.

The survey of 846 dealers conducted from May 9-May 14 showed 63 percent of dealers are bringing back employees. The survey also showed that 47 percent of dealers surveyed had remained at full staffing, while 20 percent of those surveyed said they were not bringing back employees at the time of the survey.

According to NIADA, 31 percent of dealers looking to bring back employees had problems since employees were hesitant to come back since they were making more money through unemployment, which has been boosted by an additional $600 through the COVID-19 crisis. Thirty-nine percent of dealers had no problems bringing employees back.

The survey also showed dealerships opening up again, with 44 percent doing business as usual (compared to 27 percent in April), 34 percent open by appointment only and 10 percent selling online only. Just 11 percent remain closed temporarily – down from 27 percent – and one percent reported they have closed permanently.

“I am encouraged that the COVID-19 pandemic hasn’t put more dealers out of business permanently, as was originally feared,” NIADA CEO Steve Jordan said. “Recovery and signs of life are showing, as 88 percent of dealers are open for business, with almost half open for ‘business as usual.’

“Unfortunately, open for business as usual doesn’t always mean sales have returned.”

Indeed, sales remain below pre-COVID levels for most dealers – 53 percent of the respondents said their sales were down 50 percent or more for the previous two weeks. Twelve percent of dealers said their sales were back to normal levels and 6 percent said sales were actually better than before the pandemic.

Rebuilding sales and customer traffic is by far the greatest challenge currently faced by independent dealers, cited by 38 percent of respondents. That’s twice as many as the second choice, access to inventory at 19 percent, which was followed by funding and access to capital at 17 percent.

The National Auto Auction Association has released Playbook: Auction Start-up, Response to COVID-19,” to help auctions in the pandemic situation.

NAAA President Laura Taylor introduced the new program in a letter to the industry on May 15.

“Protecting the wellbeing of our member auctions' employees and their families is always of paramount importance to the National Auto Auction Association,” she said. “but now, more than ever, they depend on us as an industry to do everything we can to safeguard them during the current public health crisis.

“To help you minimize the risk of coronavirus to your workforce and their families, NAAA is providing a playbook and video that can serve as a valuable resource in establishing workplace policies and procedures for the safety of those who will be physically present as your auction re-opens for business.”

The 18-page document, available through NAAA, also comes with a short video for auctions to play at their entry points and throughout their facilities as a reminder to staff, dealers and visitors what is expected.

Taylor thanked ADESA, Akron Auto Auction, Charleston Auto Auction, Manheim and NAAA’s Safety Committee for their work on the project.

NAAA Chairman Chad Bailey, president of Akron Auto Auction, the biggest thing is providing safety and social distancing.

“It’s just making sure you have a plan,” he said. “It’s not too hard. It’s making everyone feel safe and feel good.

“I think everybody gets what ‘distancing’ is since we’ve had to do this for eight weeks. It’s not splitting the atom.”

Bailey said it shouldn’t be a hassle for dealers either.

“It’s just some dealers are creatures of habit.” he said. “But the dealer has to perform that same stuff at his dealership.”

Bailey said a lot of this is common sense at this point, but even so, the playbook will allow auctions to have a place to go for answers.

“There might be things you don’t think about,” he said.

The playbook brings together tips and solutions that other auctions like Bailey’s sale, Taylor’s Charleston Auto Auction, Manheim and ADESA have come up with.

“When you put everybody’s heads together, you probably aren’t going to miss too much,” Bailey said. “If everybody grabs one thing out of it they need, it will serve its purpose.”

At  press time, Akron had completed its third live sale with people in the lanes since the pandemic and it’s been received well, Bailey said.

Frank Hackett, NAAA CEO, said the industry came together to develop this playbook to benefit all of its members.

It will really help when a local, state or federal agency comes in with any questions, you can show this and say, ‘This is the industry standard that comes from our association,’” he said.

 

APCO Holding LLC, a provider and administrator of automotive F&I products, will continue to provide COVID-19 assistance by joining the F&I Providers Relief Fund for F&I Managers as a founding partner.

With the auto industry facing unprecedented losses, dealers are confronting slow business and serious challenges. For some, that means temporarily closing their doors or making the difficult decision to lay off staff, enact furloughs, or make pay cuts. Founded in April, the F&I Providers Relief Fund has brought more than 40 providers together and raised over $500,000 to provide grants to F&I professionals who are confronting financial setbacks as a result of this crisis. Contributing members include a variety of F&I administrators, underwriters, roadside companies, technology platforms, and others who are involved with dealers and their employees on a day-to-day basis.

“As we continue to see the fallout from this pandemic, it is essential to come together and collaborate on what we can do as an industry,” says Fin O’Neill, Chairman & CEO of APCO Holdings. “If our responses are going to be effective and sustainable, they have to be built from a wide range of experiences. The F&I Providers Relief Fund has brought us together with one goal in mind—to help the people we do business with every day who are now impacted by this crisis. It’s an honor and a privilege to be a part of this effort.”

 

John Lee, president of APCO’s EasyCare and GWC Warranty, holds a seat on the seven-member Relief Fund board of directors tasked with raising awareness about the need within the industry and reviewing applications to award financial assistance grants.

 

Sales of certified pre-owned (CPO) vehicles decreased 46 percent year over year in April, according to Cox Automotive.

CPO sales were on a record-setting pace for the year before COVID-19 and ended down 20 percent month over month compared to March. For April, only 127,068 CPO units were sold, Cox Automotive reported.

The 46 percent drop in CPO volume was larger than both the estimated 34 percent drop in used-vehicle retail volume and the 41 percent drop in new-vehicle sales. Cox analysts said this suggests consumers in market during the COVID-19 pandemic are likely looking for low prices and value and steered away from CPO. While CPO are excellent used vehicles, with full warranties and benefitting from factory-backed inspections, they are often priced higher than a traditional used vehicle. At the same time, new-vehicle retail sales in April benefitted from high retail incentives and 0 percent financing deals, improving the value proposition. CPO units, stuck in the middle, suffered, Cox reported.

This year, CPO sales are down 18.7 percent versus 2019, with 739,838 CPO units sold through April.

Cox stated Toyota, Honda and Chevy continue to be the biggest players in the CPO market, collectively representing a third of all CPO sales. Those three plus Ford and Nissan account for 45 percent of CPO sales so far in 2020.

The Independent Automobile Dealers Association Of California updated its members on new guidelines for brick-and-mortar dealers who would like to perform online sales and home delivery. The announcement came from DMV in VIN memo 2020-04. 

If California dealers are not signed up to view DMV VIN memos, they are encouraged to go to the state DMV website. IADAC first began discussion of this topic with DMV in 2014 and saw little movement until recently when the COVID-19 crisis halted person to person interaction. The online sales and home delivery model became recognized as a health compliance solution for auto sales, but various items required attention as California laws were being violated by dealers practicing online sales and home delivery. 

“IADAC thanks DMV, CalSTA, CNCDA and California NMVB for their diligent efforts in this task,” said IADA Executive director  Larry Laskowski.

IADAC recommends that dealers fully understand these new guidelines to make sure they are compliant should they choose to adopt this model.

Stephan Wöllenstein CEO of VGC
Stephan Wöllenstein CEO of VGC

More than 2,000 Volkswagen dealerships across China have reopened, and the Chinese public is responding with strong interest. Showroom foot traffic is rivaling numbers from March 2019, Volkswagen announced on its website this week. Volkswagen Group China (VGC) is the best-selling brand in China today by sales and sold around 4.23 million cars in the Chinese market in 2019.

Volkswagen's joint venture, SAIC Volkswagen, has operated in China since 1984. SAIC Volkswagen, which includes the production of cars, parts, components and internal systems, is also back in full swing with 32 of 33 of the group's car and component plants operating again. VGC imports and produces in China the brands Volkswagen, Audi, SEAT, Škoda, Bentley, and Lamborghini, mainly for sale in China.

Stephan Wöllenstein, the CEO of VGC, said via the company’s website, “Hope is returning to the Chinese market, as we are experiencing a certain normalization of business. In 2020, highlights like the start of MEB production and the introduction of the Volkswagen ID. model family still lie ahead.”

This bodes well for the reopening of the U.S. car market.

General Motors Co. reported revenue of $32.7 billion and first-quarter earnings heavily impacted by the COVID-19 pandemic. Revenue was down 6.2 percent from 2019’s first quarter and income of $0.3 billion was down nearly 87 percent year-over-year.

“GM has suspended the quarterly dividend on its common stock and the company’s share repurchase program was also paused,” GM’s release stated.

The company described its underlying business performance as “strong.” In the first quarter, GM reported EPS-diluted of $0.17 and EPS-diluted-adjusted of $0.62; EPS diluted-adjusted includes a $(0.28) impact from Lyft and PSA revaluations; income of $0.3 billion, and EBIT-adj. of $1.2 billion, which includes a $(1.4) billion COVID-19 impact.

GM North America reported EBIT-adjusted of $2.2 billion and GM Financial had EBT-adjusted of $0.2 billion.

 

Honda recently delivered to the city of Detroit 10 Odyssey minivans that have been specially outfitted to transport people potentially infected with COVID-19, as well as healthcare workers. To protect the health of the driver from the potential for droplet infection during transportation, the Honda Odysseys have been retrofitted with a plastic barrier installed behind the front seating area, as well as modifications to the ventilation system to maintain an air pressure differential between the front and rear seating areas.

After seeing news reports about similar specially equipped vehicles modified by Honda in Japan, officials from the state of Michigan and Detroit approached Honda in the U.S. in mid-April about the possibility of acquiring similar vehicles for use in transporting local residents and healthcare workers to COVID-19 testing. A team of volunteers at Honda’s R&D center in Raymond, Ohio, including senior engineers and fabrication experts, quickly conceived and designed a method to modify the U.S. Odyssey at the Honda R&D Americas vehicle development center in Raymond, Ohio, where it was originally developed.

“As of today, the city of Detroit has tested over 20,000 residents and employees for COVID-19.  Transportation is a critical component of ensuring every Detroiter has access to a test. We are very appreciative of Honda for choosing Detroit to deploy these newly modified vehicles,” said Detroit Mayor Mike Duggan.

As states lift restrictions, Manheim will begin to allow limited access to its property, in accordance with enhanced safety measures outlined by Center for Disease Control guidelines.

Manheim President Grace Huang made the announcement in a statement on May 1.

“Starting next week, select Manheim locations will begin providing access for clients to preview inventory on a limited basis,” Huang wrote. “These locations are aligned with relevant local and state ordinances to ensure our clients have a safe experience on our lots. Upon entry, clients can expect to comply with certain protocols to ensure their health and safety.  It is our hope that, we will be able to offer this access at other locations as local and state ordinances allow.”

She added “as always, the health and safety of our team members, clients and communities remains our top priority.”

Under these updates, limited preview periods will be available during specific days and times on non-sale days only. Should clients plan to preview inventory, strict safety and compliance measures will be in place. However, auction offices and facilities will remain closed.

Manheim will maintain Simulcast-only sales at its locations, where local and state directives allow. All digital channels and tools remain fully operational. Simulcast selling will continue to be handled by Manheim’s Remote-Seller tool.

The company will continue to allow vehicle pick-up and drop off at our auction locations as local and state directives allow.

As Manheim continues to update its operations, further COVID-19-related developments could alter its plans, Huang stated.

“Should this occur, we will adapt accordingly and communicate any changes to our employees, clients and partners,” she wrote.

Manheim will continue to offer support to dealers by:  waiving Simulcast buyer and seller success fees;  extending through May the waiver of Manheim Express sell fees for all self-listed vehicles;  waiving seller fees for vehicles sold without a title or Title Absent and temporarily changing the arbitration policy by not allowing arbitration on a TA vehicle. 

“As a team, we will continue to monitor industry conditions and stay close to our clients to understand their short and long-term business challenges and opportunities. Manheim remains committed to our industry and our client’s success and appreciate their continued partnership during these extraordinary times,” stated Huang.

 

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