Measured and Phased

Why furloughing is essential to successfully coming out of lockdown

It would be more than premature to talk about a “return to normal.” There may be light at the end of the tunnel but we’re still in the dark as to its length. We should never forget that people have made tremendous sacrifices to get us here.

But the tunnel itself offers opportunity and talking to leaders in the automotive sector we’re gearing up for a staged return sometime soon after VE Day. Dealers are looking at facilitating collection and delivery of online sales, grappling with handling part exchanges and working out how to take in vehicles for servicing whilst observing social distancing. We’ve adapted our surveys to reflect this new norm.

Who’d have dreamed we’d be talking about “zoom” sales, protective screens, regular sanitisation of facilities (fogging in some cases), marking out 2 metre grids across the premises and PPE – masks, gloves, sanitisers in a dealership?

Furloughing was critical to the industry going into lockdown and survival mode. It’s implementation, as far as we’ve seen was pretty darn good. But now we’re hooked. And, for some sites, that addiction may last into the winter or even until a vaccine is widely available.

Why? Most dealers are planning open larger dealerships first. They have the space to socially distance, can generate the volumes to make it “worthwhile” and above all, profitable. Indeed, pent up deliveries, OEM pressure and a general sense of relief may lead to a bounce in late May and a successful June. Dealers will be able to unfurlough people in a measured way, phasing in their teams as demand resumes, site by site.

But if the “drip” is removed prematurely smaller dealerships are less likely be able to open profitably. There is no doubt that some consolidation is inevitable, from a long term profitability perspective, desirable even. But too much at once could lead to a catastrophic number of closures and redundancy.

So, we need the Chancellor to offer certainty around a further extension of the scheme. We want to build up as fast as we responsibly can, a measured response to consumer demand which itself may be a little tidal.

I am optimistic about how our increasingly digital world can bounce back quicker than previous financial crises. But we will need a helping hand.

In Rishi we Trust.

These are personal opinions.