Auto Industry Re-Opening 'Matter Of Life And Death'
The Tribune June 2, 2020 By NEIL HARTNELL
Tribune Business Editor
Auto dealers say today's full sector re-opening was increasingly becoming "a matter of life and death" with as much as "half the industry" in danger of folding had the Government not relaxed COVID-19 restrictions.
#Ben Albury, Bahamas Bus and Truck's general manager, told Tribune Business that the industry's cash flow/liquidity position was becoming precarious - due to the huge sums of money tied-up in vehicles they have been unable to sell - prior to the prime minister last week moving to Phase three of his economic re-opening.
#This allows so-called "non-essential" retail and store-front businesses to open their locations to customers with the necessary health safeguards in place, and multiple dealers - Bahamas Bus and Truck, Nassau Motor Company and Auto Mall - confirmed to this newspaper that they plan to re-open their showrooms and sales offices to clients with effect from today.
#"From a cash flow perspective it was a matter of life and death if we had not returned soon," Mr Albury said of the full re-opening. "I still had millions of dollars of orders coming in, but it was difficult to handle that with no money coming in. If this had continued for much longer you would probably have seen half the industry fold.
#"I applaud the decision, and think the government will be very pleased to see how our industry holds out. It's nice to do parts and service, but I had one [vehicle shipment that came in last week that was worth $500,000. That was not the biggest order you can get; you can have $1m orders."
#With huge sums tied-up in vehicle inventories they have been unable to sell since the COVID-19 lockdown was imposed in mid-March, and ongoing fixed-cost overheads such as rent, electricity, other utilities and bank loans to cover, auto dealers were facing a tightening cash flow squeeze that had lasted two-and-a-half months until this week's re-opening. Parts and services sales alone were insufficient to cover operating costs.
#"In our business, you need an incredible amount of cash to try to move it," Mr Albury confirmed. "I can't express from a cash flow perspective how debilitating this was.
#"I was fortunate to be in a business where the owners kept the money in the business; they've not lived high off the hog and spent all the money it has made. They've kept funds in the business. There are no bank payments, no rent."
#The Bahamas Bus and Truck chief said the company's full 40-plus workforce will all return to work as of today, adding that he expected business volumes generated over its digital platform to increase by 30-40 percent due to a spike in usage by customers during the COVID-19 pandemic.
#"We'll be open as of Tuesday, 9am to 5pm, per the order and we'll be practicing social distancing, trying to offer what we can curb side and move to as much of a digital platform as we can," he told Tribune Business, "keeping employees and customers safe. That's the number one priority.
#"We understand the situation, and the country needs to move forward and definitely not look back. We'll do our part to make sure everything is controlled, clean and as safe as possible. We've maintained staff level right through this process, and we have a lot of product given that we had such a good run.
#"We have a lot of product on order to carry us through the next few months. Once orders are placed and confirmed you cannot change them. We had a lot of inventory come in during the lockdown, and have had an incredible amount of inquiries via Facebook and other social media platforms as well as e-mail," Mr Albury continued.
#"There seems to a great deal of interest, which I'm optimistic about, in purchasing vehicles and companies wanting to be more delivery focused. It's incredible so far, the interest, and we'll see how that translates into sales n the coming weeks as more of the population gets back to work. I don't expect an explosion, but we will slowly turn back in the direction we were going in."
#Mr Albury said Bahamas Bus and Truck's showroom "has a lot of room for social distancing and is not usually a high traffic area", suggesting it would be easy to enforce social distancing protocols. And he added that the company's increasing use of technology, with the ability to give consumers virtual tours of vehicles they want to buy, was only likely to grow in popularity.
#"We're going to continue with our Facebook, Instagram, e-mail and website. We're going to technology so we can give people that experience from home," he explained. "I think we'll probably see a 30-40 percent increase in that, I believe. That's one tool I think will be very effective.
#"That was always the direction we were going in. At Bahamas Bus and Truck it was something we were interested in, and trying to develop. That's the type of world we're living in. They're looking at vehicles online in the US and Japan, and we want to be able to provide the same sort of tool. It's what we've been gearing up to do.
#"Manufacturers we represent have been very supportive of us in moving in that direction. It's something we have to along with, embrace and are very excited about the prospects."
#Mr Albury added that he hoped auto dealers would follow other industries in being "surprised" by the level of demand for their product as the sector fully emerges from lockdown. He recalled a conversation with a concrete supplier who informed him that he has more work now than pre-COVID-19, and is having a tough time keeping up with demand.
#Meanwhile Fred Albury, Auto Mall's principal, told Tribune Business that he had effectively written-off 2020 from a business perspective and was now firmly focused on keeping the dealership "afloat" through the remainder of the COVID-19 pandemic's fall-out.
#"This years as far as I am concerned is a wipe-out," he said. "Right now it's controlling expenses and trying to keep our head above water, and praying a vaccine is found and the tourism industry gets going again and kicks back in.
#"It's a touch and go scenario. We're going to try and do some things to keep expenses under control and keep ourselves afloat. Other than that, I will be retiring to Abaco and fishing for a living." The Auto Mall chief said the aim was to "try and stay afloat" until the tourism industry "ramps up" again, which he did not expect until October/November this year at the earliest.
#Still, Fred Albury confirmed that Auto Mall and all aspects of its business will fully re-open as of today. Predicting that June and July are "going to be very rough, tough months", he disclosed that while all service staff will be recalled, the parts department is likely to be kept on a "rotation system" until mid to end-June, while the need for sales and administrative staff will be evaluated depending on the company's needs.
#"I won't be 100 percent. It's a wait and see scenario," Fred Albury said. He added, though, that Auto Mall had managed to conclude several vehicle sales that had been pending pre-COVID-19 during May. And continuing phone and Internet inquiries showed demand remains, with one bank wiring a deposit for a BMW on a client's behalf.
#While industry-wide auto sales were likely to suffer a 30-40 percent plunge back to 2009 levels, Fred Albury said: "I'm feeling a little more upbeat about this situation, and the country is moving in the right direction by trying to open back up."