I am a "client advisor" at a car dealership owned by one of the largest dealer groups in the country. Car dealers as a lobbying group have been fighting to be labeled "essential" businesses. They claim cars must be repaired, cars need to be replaced, and lease terminations require new purchases. The reality is far uglier.
Our parent company entered into a $1T deal to purchase a dealer group in Texas. With the expected long-term downturn in business, they are desperately trying to get out of that contract. Apparently they are on the hook for $250M to walk away but are confident they can negotiate that down to $30M to vacate the contract. So it is obvious they think prospects for a profitable near-future are slim, at best, and they're willing to spend at least $30,000,000 to cut their projected future losses. And yet they are working themselves into a frenzy to have all existing stores remain open. Why?
Obviously there are fixed costs that won't go away, like interest on inventory. But take a look at what costs they would incur if they did the right thing for the safety of employees and customers, and shut down the sales end. Like
@leesonic, if sales people are sick or otherwise choose to stay at home out of safety concerns, it comes out of our PTO (paid-time-off) days which accrue from the start of the year based on time worked. I currently have just over 3-days out of an annual tenure-earned 22-or-so I will have. As salespeople our employers are required by the state to pay us hourly compensation of something over $8. But, if your commissions earned don't meet what your hourly pay is during a period, you owe the difference back to the employer. By contract we are not hourly employees, but "at-will" employees who can be terminated for no reason. Now, if I sit in the office for the next several months earning either nothing or a substantial reduction in my normal earnings, it costs my employer nothing. If I take my available PTO time now, it will be based on previous earnings. If I take more than my 3-days, I'm essentially borrowing against future earned PTO days. We have no sick-leave provision. If I choose to continue to work as we see what unfolds, my PTO will be calculated from a basis of possibly a zero or negative income number. By the end of the year it is possible that I'll earn nothing from work, and my paid-time-off will amount to nothing, as well.
So, for our dealerships to remain open during a pandemic will cost the owners and shareholders nothing in sales compensation or commissions. I'll be working in an unsafe environment essentially for free, or perhaps I'll even owe my employer for working.
In general, automobile manufacturers hide the true cost of their vehicles from sales people anyway. These days manufacturers pay a "holdback" to their dealers based on a percentage of the invoice price if they've met certain criteria for a month or quarter like customer satisfaction survey results, or volume levels. The "holdback" money does not become part of the commissionable amount on which your salesperson's compensation is figures. For example, BMW offers several 8-series models at $100,000 and above. Let's us a $100k example. Difference between MSPR and invoice cost may be around $4,000. Normally I might earn 20-30% of that in commission depending on my volume. But let's say BMW also includes incentives to the customer and the dealer totaling $5k or more. To sell the sled and get it off of inventory, the dealership decides to discount the vehicle $10k. The customer buys a $100k car for $90k but still expects the salesperson to treat him like someone who just spent $100k. The salesperson is paid on a loss, or a minimum, which for me would be $250 on a new car for time and trouble—past, present, and future—with that client. The dealership will still get another $8k or so in "holdback" from the manufacturer out of which they pay the salesperson . . . nothing. In fact, even if there were any profit left in the car, the salesperson is charged "pack" and lot charges on every car which simply adds around $800 to the "cost" from which any commission is figured. And you know that "dealer processing fee" you see from a state mandated max of maybe $199 in some states to unlimited in others (our local Ford dealer charges $699)? None of that is figured in the salesperson's compensation, either, even though it is profit to the shareholders.
So, for the sake or brevity (too late, I know), if I sell 5 used-cars and 5 new cars this month at minimum or zero commissionable gross profit, I'll be paid $2,250 for the month. For a typical 10.5-hour work day, 60-hour work week or 260-hour work month, that's around $8.50/hour. At the current rate of business that is more likely to be six sales per month, if that. The math gets worse. It's possible I will owe money back at the end of the month. And if sales completely flatten out based on all non-essential workers being asked to stay home and no one can buy any cars, I'll be working for free.
So why would a dealership want to stay open? Well, using the above premise that salespeople cost the dealership nothing if they sell nothing, and that the dealership makes most of the money if they do sell something, then the cost to an employer in unemployment insurance is far greater than the Zero they'd be paying us to sit there as an "essential" business. Bottom line is we cost our employer nothing if we show up to work, but we cost them quite a bit if ordered to stay home. "Essential", but to whom?
Be safe and enjoy your weekend. Some of our stores have now decided to be open every Sunday during the pandemic to make up for lack of traffic during the normal week. Such insanity! Maybe they'll start offering free toilet paper with every car purchased.
