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Car dealers brace for Stage 4 lockdown, JobKeeper pain

Victorian car dealerships are bracing for Stage 4 restrictions, while the industry faces an uncertain nationwide future when the next round of JobKeeper government assistance kicks in this September.

1 month ago
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Scott Collie
News Editor

A quarter of Victorian car dealership employees could be out of a job by the end of 2020.

Dealerships in Victoria are preparing to close their doors for six weeks under recently-announced Stage 4 lockdown rules, having previously been allowed to operate with consideration for social distancing.

Although service centres and mechanics will be allowed to remain open, the decision about whether to do so isn’t simple.

Australian Automotive Dealer Association (AADA) CEO, James Voortman, told CarExpert some dealers are expected to run scaled-back service departments in accordance with state government rules, while others will not operate at all through the latest Victorian lockdown.

“[Dealers] have no choice in terms of the retail side of things, so they will be closing those centres of their business. Every dealer is different, but many of them will maintain service and repair capability – and fulfil those services under the guidelines that have been provided by the Victorian Government,” Mr Voortman said.

“But it will be at a reduced level. It’s going to be a significant reduction in current activities, and there will be economic hardship.”

Victorian Automobile Chamber of Commerce (VACC) chief executive officer Geoff Gwilym told CarExpert he’s fielding 200 phone calls every hour from dealers trying to work out what Stage 4 restrictions mean for them.

Despite the impact of a hard lockdown on business, VACC research shows more than 80 per cent of Victorian car dealerships won’t qualify for the next round of JobKeeper government assistance when it starts on September 28.

If these conditions remain, the VACC projects 25 per cent of dealer staff – almost 3300 people – who were employed in February could be out of a job by the end of 2020.

That doesn’t include the impact on suppliers and aftermarket manufacturers. It also doesn’t take into consideration the fact international labour will be hard to find post-pandemic, nor a potential shortage of trained apprentices.

“Hardly any dealers in Australia will qualify for JobKeeper 2.0,” James Voortman told CarExpert.

“I think we are looking at potential job losses depending on what the next three to six months holds for us, the anecdotal evidence suggests we are looking at a more difficult environment in Victoria and potentially beyond.

“It’s going to be very difficult for dealers, particularly when that assistance comes off. It’s going to be difficult for them to keep staffing levels in a reduced economic environment.”

JobKeeper 2.0 eligibility is currently calculated based on turnover, rather than profit. For businesses such as car dealers, which have large annual turnover figures but tend to operate on razor-thin margins, that precludes them from Federal assistance.

Mr Voortman said the AADA is working with the both Federal and state governments, “letting them know – as they probably will know anyway – that our industry is going to experience a significant setback from this”.

“If they are going to make changes to JobKeeper, they should follow the principles that they should be looking forward, looking at the conditions that are ahead of us, rather than looking at the conditions that were behind us,” he said.

“There was a good month of June in the industry, but it was one good month in the context of around 27 bad months, so some process of evening it out to make it more fair… there are a number of things they can do.”


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