Corona Continues Post-Election
Let's start with the never-ending coronavirus situation. We are currently on our second wave, and many are worried about the future. Many businesses and individuals were crippled eight months ago when this all began, and many are still barely surviving. Nationwide, many states have started setting certain limitations and scaling back on reopening to slow the spread of the virus. Currently, most automotive dealerships are not affected by these new rules, but unfortunately, that is not the case for everyone. Back in October, Governor Cuomo did issue shutdowns in certain hot spots in NYC. Schools, churches, restaurants, and yes, even dealerships that fell into these zones were affected. Plaza Motors in Brooklyn was one of them. While they are open for appointments only, their customers walk a few blocks over and shop the competition.
Their concerns are amplified since the demand for vehicles has not declined, and they are losing sales. Yes, at the very beginning of the pandemic, we saw a rapid decline in automotive transactions, but have recovered a lot since then. I still believe that one of the bigger forces is the need to have a reliable mode of transportation. The pandemic has made people wary of public transportation and having your own car mitigates that apprehension.
A major fear nationwide is another possible shutdown, especially as we get into the colder months and cases are rising at a rapid rate. Needless to say, nobody wants that to happen, and hopefully, most are prepared – as much as one can be – in the event, it does happen again. Perhaps it doesn't mean much at the moment, but I was watching the news this morning where Governor Phil Murphy did state in an interview that he currently has no plans to do a massive shutdown like the one we had back in March. And aside from those hotspots, the same goes for New York. Like I said, that might not mean much later, but one thing I have learned in the last few months is that we have to take each day as it comes to us. We can plan and hope, but we also have to be awake for any curveballs that may come; and on a brighter note, there may be a potential vaccine on the way!
And of course, we have to talk about the election. Over the weekend, Joe Biden was predicted to be the next president-elect (pending all the counts, etc., etc., etc., are correct). Note: I am not a political person whatsoever and tend to stay away from conversations related to the subject. There are talks on how his administration will affect the automotive business and worries about how his tax proposal could hurt the luxury market. Biden is proposing a higher tax rate on those making over $400,000/year, and some are concerned that this will affect those on the luxury side. I could be wrong, but my personal opinion is that it really won't affect it. If someone in that tax bracket wants to purchase, for example, a Mercedes, I'm pretty sure they are still going to go and get a Mercedes. I have friends who work at luxury brands, and from my understanding, even during the height of the pandemic, "those people" who wanted a luxury car still purchased a luxury car.
Some also say that under the Biden administration, a bigger stimulus package may be on the table as compared to the one back in April. A renewed stimulus could help bolster portfolio performance, especially for those who need assistance in paying bills. Biden also has a huge "climate plan that includes investments in automotive infrastructures, such as adding 500,000 EV charging stations nationwide….. Biden's EV plans — a centerpiece of his campaign — face an uphill battle. "What does a deadlocked Congress on that mean?" said Morningstar's Whiston. "It could be something like the $2 trillion number becomes a very different number — a much smaller number." A plan is a plan, so let's see what happens!
I guess the biggest question is how everything going on is going to impact our future – in and outside the auto business. Currently, the biggest factors right now are the coronavirus, a pending vaccine, and a new presidential administration. We will take each day, one day at a time, and adjust like we always do. We are resilient, and we will overcome.
Helpful Links:
Election Outcome May Impact Auto Finance
Gridlocked Congress May Stall Biden's Auto Agenda