New California COVID Rules to Curb Dealership Traffic

Here’s a chilling reminder that besides health and safety, the lethal coronavirus pandemic still poses a serious threat to auto sales and business in general, as California imposes stricter social-distancing restrictions on businesses, including most of the state’s auto dealerships.

“The spread of COVID-19 has increased over the past several weeks, and many experts project higher case numbers in the coming fall and winter months,” the California New Car Dealers Assn. says in a bulletin to its members. The group says it’s the nation’s largest state auto dealer association, with more than 1,200 members.

As a result of the uptick in cases, Gov. Gavin Newsom has placed 28 counties, representing 94% of the state’s population, into the most restrictive tier of coronavirus social distancing, and an additional list of counties into the next-highest category, effective Nov. 17.

“California is experiencing the fastest increase in cases we have seen yet – faster than what we experienced at the outset of the pandemic or even this summer. The spread of COVID-19, if left unchecked, could quickly overwhelm our health care system and lead to catastrophic outcomes,” Newsom says in a statement.

The upshot for California car retailers is that most dealerships are limited to occupation by no more than 25% of their indoor capacity. Even the next-highest category imposes a 50% limit.

Earlier this year, California was an early mover in shutting down businesses to try to contain the pandemic. Newsom issued a statewide stay-home order on March 19, comparing the new restrictions to pulling the “emergency brake.” Many of the restrictions were eased in May.

All this time, California dealerships have been considered “essential” businesses. During the shutdowns earlier this year, online sales and on-site dealership parts and service operations were allowed to continue, even though there were strict limits on dealerships in terms of the number of occupants, mandatory mask-wearing and social distancing.

However, the net effect was that new light-vehicle registrations fell 49% in California in the second quarter vs. second-quarter 2019, the state dealer association reports. In the third quarter, registrations were down 20%.

Earlier this month, before the latest restrictions were announced, the dealer association said the state “could post a small increase” in registrations in the fourth quarter.