Top 10 COVID-19 Dealer Business Considerations

April 3, 2020

By: Michael J. Dommermuth and J. Randolph Earnest

The COVID-19 crisis has put dealers and their businesses through a whirlwind of change.  One day its business as usual, the next day sales are prohibited and the next day online only sales are permitted.  The only constant is change!

We hear from dealers throughout the state and we understand this is an extremely difficult time for ownership, management and employees.

Dealers are entrepreneurs and even in the face of adversity opportunities exist.  As Winston Churchill observed: "A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty."

We are providing an outline of our TOP 10 considerations for dealers to help adapt to and endure the current economic, social and health turmoil.  Remember, change is difficult, but in our experience, the faster change is embraced and implemented, the better most business will fair:  


  1. Follow the state mandate prohibiting “in person” sales. 
    • All vehicle sales must be made online or by phone.
    • At delivery limit contact and strictly follow the CDC recommendations on cleaning and social distancing.Follow the CDOT vehicle cleaning protocols prior to delivery.
    •  Do not open your showroom.  The State of Colorado is watching!
  2. Take a critical financial review of your dealership.
    • Review rent, expenses, payroll, loans, lines of credit, advertising. 
    • Review parts inventory and consider return of excess parts for cash.
  3. Consider if any vendor contracts can be suspended or terminated.  What is vital to your business at this time?
    • Does your vendor contract include a force majeure clause?
    • If a non-essential vendor claims that advance notice is required let them know you will switch when given the chance.
  4. Consider obtaining a SBA loan from your local bank or another lender.  If your lender does not participate, ask them for a referral to another bank will be involved with SBA loans.
  5. Ask your bank to defer loan payments for 90 days.  Many banks are willing to help.
  6. Cease all orders on new vehicles with the factory.  Put the factory on notice, in writing, as required in your sales and service agreement.
  7. Temporarily trim hours for employees where possible and lower salaries to high paid employees or key management. 
    • Temporarily lower or suspend dealer principal compensation and let your employees know that you reducing your compensation and sharing the sacrifice
  8. Stop curtailment payments, if allowed by your lender, and stop excess floor plan pay downs on inventory, unless you have a significant cash position.
  9. Know the implication of the new (i) Families First Coronavirus Response Act and Emergency Family, (ii) Medical Leave Expansion Act to the Emergency Unemployment and Access Act of 2020, and (iii) the Coronavirus Aid, Relief and Economic Security Act, and how they may effect reduction of hours and employee terminations.
  10. If appropriate, lay off employees or reduced their hours, make sure they know to claim unemployment benefits, provide COBRA notices and other termination requirements.
    • Review your personnel and consider terminating unproductive, marginal or troublesome employees.
    • Review employment decisions with your employment lawyer. Adverse employment decisions require proper documentation.
    • Be sure to document the cut hours and any termination properly.