After a major drop-off in car sales during the spring, some local car dealerships say they are now seeing a recovery in customer traffic and sales, while the sales model is now shifting more quickly toward online.

Car sales from March to June in Virginia were down significantly compared with those same months a year ago.

Preliminary data on new vehicle registrations collected by the Virginia Automobile Dealers Association, based on figures from the Virginia Department of Motor Vehicles, suggest new car registrations were down about 45% in June compared with the same month a year ago.

But that was much better than in May, when car registrations were down about 80% compared with the same month a year before, and in April, when year-over-year new car registrations fell 64%.

The dealers group cautioned that registrations at this point may not reflect actual sales.

Light truck registrations declined 29% in June compared with a year before. They had been up 5.7% in May.

“As an industry, and at our company, right around March 15 is when things got real with COVID-19,” said Liza Borches, president and CEO of Carter Myers Automotive, which has 16 locations in Virginia including five Richmond-area dealerships.

“The last 10 days of March and first three weeks of April, things were extremely quiet in the dealership,” she said. “About the third week of April, things started picking up a little but on the sales side, and we started seeing sales pick up all the way until now.”

As more customers have been shopping since social distancing rules in Virginia have been loosened. June was on track to be a “good month” for the Carter Myers dealerships, the family- and employee-owned business made up of Colonial Chevrolet, Colonial Honda, Colonial Hyundai, Colonial Subaru and Colonial Kia in the Richmond area. It also owns dealerships in Charlottesville, Staunton and Williamsburg.

“Some of it might be pent-up demand,” said Borches, the fourth generation of her family to run the company. “A lot of people are choosing to do their summer vacation by driving instead of flying.”

Jason Wilson, general manager of the Virginia Automobile Dealers Association, said it has been “a bumpy, wild ride” for several months.

“Sales are down, obviously,” he said. “What we have seen the last couple of months is there has been somewhat of a recalibration. The dealers have made adjustments and changed processes.”

“We have seen an increase in some sales that have exceeded expectations,” he said, adding that he has spoken with some dealers who had record months in May.

Auto service has been down because people are not driving as much, but auto dealers in Virginia have benefited by being declared an “essential” business for service and parts. Sales departments, which were considered non-essential retail, likely were helped by service counterparts being allowed to remain open. All departments have taken precautions to prevent the spread of the coronavirus.

“That has made the car business in Virginia not as volatile as the car business has been nationally,” said George Hoffer, a transportation economist and a professor emeritus at Virginia Commonwealth University.

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The auto industry has been buttressed by fiscal and monetary stimulus pumped into the economy by the federal government even with a high unemployment rate affecting consumers, Hoffer said.

That includes the federal stimulus checks of $1,200 to $2,400 per household, and the extra $600 a week in unemployment benefits for people who have been laid off from jobs as part of the CARES Act. Historically low interest rates also have helped support car dealerships, Hoffer said. The Federal Reserve has signaled that for the next year or two, interest rates are going to be at zero.

It’s unclear, though, just how long those economic stimulus measures will last and help support consumer spending.

“I don’t know how long it will last,” said Haywood B. “Huddy” Hyman Jr., who with his two sons owns seven Hyman Bros. Automobiles new car dealerships in the Richmond region and Newport News.

“You have got a lot of incentives out there with the government money and the extra unemployment money,” Hyman said. “I don’t know how business will be after some of that drops off.”

Sales at his dealerships were off about 50% in April compared with the same time last year. Hyman Bros. owns Nissan, Kia, Subaru, Mitsubishi, Land Rover and Jaguar franchises on Midlothian Turnpike as well as a Mazda dealership in Newport News. The company also owns Hyman Bros.’ used car lots on Midlothian Turnpike and on West Broad Street.

“In April, I was wondering” what we were going to do, Hyman said.

In May, sales and service improved some, but was still down about 20%. June was turning out to be a much better month.

“We could be almost back where we were last June,” he said.

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Used car sales have seen a faster recovery.

Hoffer said prices could be expected to drop later this summer and into the fall as more leased cars enter the market and rental companies that have suffered because of the pandemic put more product into the market. For instance, Hertz Global Holdings Inc., one of the nation’s largest car rental companies, filed for bankruptcy protection in late May.

Used car sales have held up during the pandemic in part because people who once relied on public transportation are now wary of that and are looking for affordable cars, Hoffer said.

“There are a lot of people who have come to the market who may not have intended to before this because they were using ride-sharing or public transportation,” said Ron Kody, president of Richmond Ford, which owns the Richmond Ford Lincoln dealership at 4600 W. Broad St. and the Richmond Ford West dealership at 10751 W. Broad St.

“That is bringing some buyers we would not have traditionally seen and that is helping to spur the used car demand as well,” he said.

Like other dealers, Kody said he has been able to keep his staff employed during the pandemic. Richmond Ford is even doing some hiring for technical and support staff at its locations.

Used car demand also has been supported because of a lower supply of new cars.

“The used car side of the business has been especially strong,” Hyman said. “Maybe that is because there is not as much new car product out there.”

One of the key issues emerging for dealers is inventory. Automobile manufacturers were closed for several weeks during the spring, and production of new vehicles dropped off significantly.

“You had manufacturing grind to a halt with closures,” VADA’s Wilson said. “In the short term, over the summer, you are going to see new car inventories being tighter than we are accustomed to.

“Assuming we do not have a relapse, we think inventory levels are going to get back to normal at the end of this year or early next year.”

Hyman said he thinks July and August could be “difficult months, just because of inventory.”

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Innovation is taking place at more dealers because of the pandemic.

Some are offering more services such as online sales, home deliveries and curbside pickup of cars.

“Digital retailing has been a trend,” Wilson said. “We have been going in that direction over the last year or so. COVID-19 just expedited that.”

Borches said the majority of Carter Myers dealership customers are doing a portion or a significant portion of the sales process online.

Richmond Ford’s online traffic has hit records during the pandemic, Kody said.

“We are figuring out how to deal with this pandemic and out how to do business in a new market,” he said.

Hyman said his dealerships have been offering shipping of cars to customers for years.

“That has gone up about 30% during COVID,” he said. “The other thing we have done is delivered many cars to people’s homes. They can do the paperwork online.”

R.J. Robinson, a partner in Parks Chevrolet RVA, which bought the former Royal Chevrolet dealership on West Broad Street last year, said the pandemic “has changed the way we go about our day-to-day business.”

“People are shopping more online,” he said. “We track our online activity every single day, and it has jumped up just because people are at home. We have shipped more cars to people all over the country. People are finding the cars online and doing their research.”

The dealership handles the transactions via text, email and phone, he said.

“Customers are all over the map when it comes to this,” he said. “Some do not mind coming in to the store and sitting down and talking. Others do not want to do that.”

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CarMax Inc., the Goochland County-based used car retail giant, reported comparable store used unit sales declined 42% for its fiscal first quarter that ended May 31 compared with a year ago.

Yet the nation’s largest used car retailer said sales have “progressively improved since hitting a trough in early April.”

Comparable store used car sales for the two weeks that ended June 14 were within 10% of last year’s sales, “with many stores generating positive comparable stores sales,” the company said.

At its first store on West Broad Street in western Henrico County, customer traffic is improving as social distancing rules have eased, said Mike Evans, the store’s general manager.

The store took steps to put customers at ease, including rearranging desks in the sales room to maintain 6 feet of distance between customers and sales staff. “High touch” areas of the store are sanitized every two hours, and staff members are required to wear masks on the property.

“The traffic patterns are increasing almost daily,” Evans said. “Right now, our [customer] traffic at this particular store is at the same levels it was prior to COVID-19.”

CarMax furloughed about 15,500 employees nationwide in April, but the company has since called back about 85% of them, it reported in June.

CarMax introduced a new service in the middle of the pandemic called “CarMax Contactless Curbside,” which enables customers to do most paperwork online, and then complete the final pieces of the transaction from inside their vehicle at the store. All test drives are done alone at CarMax stores right now.

“You test drive the car alone — take it out for a few minutes and decide if it is the car for you — and you pull into a curbside spot at the store,” said Jim Lyski, CarMax’s executive vice president and chief marketing officer. “You call us, and we will bring out any final paperwork you need to complete.”

“We really see the COVID-19 pandemic as more of an accelerator of consumer trends that have been going on for quite some time,” Lyski said. “Online shopping, online research and online buying are all things consumers were gravitating towards in the used car space,” with consumers not only shopping online but seeking financing approval online.

“We have a seen an an uptick in the usage of all those tools since the pandemic,” Lyski said. “More and more [customers] are completing at least part, if not all, of the process online. I think it will be permanent.”

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