AutoNation Inc., after a 50 percent plunge in new- and used-vehicle sales in the final two weeks of March, is now seeing a recovery in its biggest markets.
The nation’s largest dealership group in early April furloughed 7,000 employees — more than a quarter of its work force. Last week, the Fort Lauderdale, Fla., retailer, which has about 230 stores across the U.S., said it had brought back about 1,200 employees.
“We don’t have a defined cadence” for bringing back the remaining workers, CEO Mike Jackson told Automotive News last week. He said the company had not terminated any employees.
AutoNation returned $77 million in federal loan money it received for 83 stores through the Paycheck Protection Program. The move came following updated guidance that deemed it unlikely public companies would be able to certify the need for funding “in good faith.”
Sixty-three percent of AutoNation’s new-vehicle volume stems from Florida, Texas and California. Same-store retail sales the last 10 days of March in Florida, Texas and California were down by half, 40 percent and 70 percent, respectively, while sales the last 10 days of April were down 25 percent, 5 percent and 30 percent, respectively.
AutoNation also temporarily cut employee base pay, froze hiring, shaved advertising costs by about half for the second quarter and is postponing more than $50 million in capital expenditures. CEO Cheryl Miller, who was granted medical leave last month, and Jackson — who was named CEO until Miller returns — took 50 percent salary cuts, among other executive, corporate and regional staff pay cuts.
Early this month, AutoNation had more than $1.4 billion in liquidity. It posted a net loss in the first quarter of $232.3 million on lower revenues and $315 million in after-tax charges related to the coronavirus crisis. A year earlier, AutoNation’s net income was $92 million.