TNIADA Virtual Town Hall Meeting Recap
Senator Paul Rose
On Tuesday, April 21, 2020, a virtual town hall was held in order to address helping businesses in the auto industry during COVID-19 concerns. Senator Paul Rose is well aware of the pure work ethic needed in order to keep businesses afloat during these times. He began working as a newspaper delivery boy and has been involved in many other businesses since then and is a natural entrepreneur, so he fully appreciates the current situation.
Prior to COVID-19, Tennessee was ranked the lowest in per capita debt. $1.89 billion has been budgeted to help get the state through these tough times. Governor Bill Lee is working with a support group made up of businessmen and businesswomen. Of the twelve subcommittees currently advising him, one is dedicated to auto dealers. Work is currently being done on specific guidelines for opening the state back up. Senator Rose assures everyone that “We have had tough times before and I know we will get through this now."
Paycheck Protection Program (PPP) loans have been issued. They are being used, and entrepreneurs are seeing an improvement in their businesses. The guidelines for PPP loans will be posted on the NADA website. $349 billion went out in the first run, and an additional $300 billion is expected in the second run. Related finance companies should be included in the second round of PPP loans if they were not included in the first round.
Tennessee is not currently set up with the software to participating in e-titling, but this is on track to be ready in June. Several other states have been seeing a lot of success in using e-titling. This will have to pass through the senate before Tennessee can also participate.
There are more than 3,500 automotive dealers in the state generated over $1.2 billion in sales last year.
Revenue is expected to drop in April, May, and June due to lack of sales, but once again, the state will start opening in the coming weeks. When the legislation reconvenes, they will reassess the budget. Participation in sales tax is key and the senate is willing to work closely with auto dealers as things move forward. Sales are predicted to grow as stimulus checks come in.
The shift to online sales and purchases is also affecting auto dealers. the DAA auction is still open, and people are still able to come and look at the vehicles. Auctions should not be taking money without the titles – DAA holds themselves to good practices, but this might not be true of all auctions. Sellers and buyers are cautioned to know their auctions and lenders and to build relationships.
Finance companies continue to want to work with dealerships to keep consumers in their cars. They are helping consumers by becoming consultants and working around unexpected unemployment. Extensions are being granted, but again, as stimulus checks arrive, they are being used to catch up on loan payments. More than $500 million has been put into consumers’ hands to keep the economy running, and dealers are encouraged to mention the drop in interest rates.
As far as dealer financing, payroll and advertising are the top expenses. 75% of expenses should be spent on payroll and the remaining 25% on a mortgage, utilities, rent, and so on. Employee retention credit is available for businesses with fewer than 100 employees. This would mean receiving $500 per employee per quarter, but recipients of a PPP loan do not qualify for employee retention credit.
Deferral of tax deposits and payments is acceptable from March 27, 2020, until December 31, 2020. This means that social security tax will not be required but will have to be paid back. The first half will be due by December 2021 and the second half by December 2022. This can be used with a PPP loan.
Accountants will have more updated information by April 26, 2020.
As far as international concerns, COVID-19 caused supply chain interruptions when it first started in China. Most suppliers were able to order enough to get through as they normally would over the Chinese New Year. Ports were opened again in early March and the supply has kept up well since then. Some states in Mexico do not currently consider automobiles as essential, causing some minor concern that parts might not be available. However, in spite of these setbacks, business is increasing and will continue to stay on track.
In closing from TNIADA president Tracy McMurtry:
“In these unconventional times, we must create and adapt. And those two things are done much easier if we work together with one goal of success in our industry. We need all the parts of the industry. Not just the dealers but the vendors, such as the auctions, the service, the financing, the warranties, the accounting, and of course the legislative part. Remember, there is strength in numbers. Everyone please stay safe and use common sense and let’s turn this economy around for the state and the nation.”
Virtual Town Hall 4/21/2020