By Teri Burns
New Mexico’s automobile dealerships continue to meet community needs, even under the governor’s stay-at-home orders. Still, the loss of business during the COVID-19 outbreak may mean the end of many small dealers, and that may hurt small communities. “The reality is in New Mexico, like much of the West, our transportation system is almost wholly reliant on private transportation,” said Marc Powell, Executive Director of the New Mexico Independent Automobile Dealers Association. “Rural New Mexico really relies on small dealers in small towns,” he said, adding, 60-70 percent of all cars sold in the state are $10,000 or less, so small car dealerships are important. “Small dealers are really there to serve the community because, whether you are essential or you are staying at home, people have to have an automobile,” Powell said. He added, “The average car in New Mexico is 14 years old, so there are a lot of cars out there that need replacing.” The good news is, despite the requirements for social distancing, automobile dealerships are still able to meet community needs almost completely online and/or by phone. “Our goal is to protect everyone and live up to the spirit of the governor’s order,” Powell said, adding dealers are being extremely cautious. The governor’s order required dealerships to close their showrooms to potential buyers, leading many to switch the focus of their sales online. The new focus completes most of the car-buying process online and by phone, including applying for credit if needed. Dealers do as much as is possible online and by phone, leaving only the test drive and the signatures on the paperwork for in person, since the signatures must be originals. This last part of the process must be completed outdoors. “The process is done without going into the showroom and with extreme social distancing,” Powell said, adding the cars are sanitized before and after any test drives. “As much as possible, like applying for credit, we will try to do online, but when they have to meet, it will be done as safely as possible,” he said. The NMIADA represents 1,100 independent car dealers in New Mexico, with approximately half of those in Bernalillo, Sandoval and Santa Fe counties, according to Powell. He said the remaining 500-600 dealers are located throughout the state. It’s a relatively small number and could decrease further with the current crisis. Powell said dealers have seen an 80-90 percent decrease in demand even with the limited ability to continue sales. That’s especially difficult for smaller dealerships who typically do not own all of the inventory on their lots. Instead, they take out loans to purchase vehicles for sale, which is problematic at times like these. “When you get a demand shock like this, the key is how long does it take for demand to recover,” he said. “If demand comes back in June, July, and August, we could see a drop in dealerships of 20 percent or less,” he said, adding that number could be more like 30-40 percent if demand does not bounce back. “We probably have 8-10 percent of dealers go out of business every year anyway,” Powell said, “so basically, this is going to at least double that.” He added, “During the last major recession in 2008, we went from almost 1,500 dealers to something over 900. We’re just now back up to 1,100, and I expect us to take another hit from this.” That hit will not be atypical for small businesses, he said, noting small businesses simply don’t have the financial wherewithal to survive such a deep cut in income. Still, Powell said he is hopeful. “My hope is that folks will come out of this with a little extra cash in their pockets and will get rehired quickly, and demand will go up.” In the meantime, he hopes those in need of reliable transportation will make use of the virtual car buying experience with their local dealership and shop the local businesses they rely on as often as they can.