Listed dealer Colonial Motor Company (CMC) says its heavy truck and tractor divisions helped maintain some activity during the level 4 lockdown while its car dealerships “effectively went into hibernation”.
In a letter to shareholders, CMC chairman Jim Gibbons notes March revenue was down 37% compared to the same month a year prior, matching the decline in the new vehicle industry.
CMC ownership includes Southpac Trucks and Agricentre South with the Case IH tractor franchise while its nationwide vehicle dealerships include brands such as Ford, Mazda and Suzuki.
“The company has come through the lockdown with the financial resources and people organisation to adapt to the new level of activity. From this point on, the real issue is consumer confidence,” the letter says.
In April, the company saw “very little revenue” with total new vehicle industry registrations down 90% for the month.
“Company revenue was down 82% on April 2019. There were variations. The car dealerships were fully closed with only a very small amount of essential service work carried out. Heavy trucks and tractors on the other hand had more customers who were an essential service, with some replacement sales as well as service business, managed with stringent procedures to maintain customer and employee safety,” the letter says
“The main emphasis was on preserving cash. The company went into level 4 lockdown with a buffer of credit available. ‘Cash burn’ during lockdown required strong control of expenses and inventory. Both were well managed. The Government wage subsidy assisted, contributing approximately one-third of the normal payroll.
“Most employees were paid 80% of their average wages, including commission earnings, with the option to increase this to 100% by drawing down on annual leave. Directors’ fees were also paid at 80%. Inventory control was assisted by proactive supporting policies from our major franchisors, notably Paccar and Ford,” it says.
With the move to alert level 3, dealerships were open but the restrictions saw “high cost, low volume activity”.
Level 2 saw a return return to “almost normal” but with “considerable variations between dealerships”.
“Provincial locations were generally stronger than cities. The May total new vehicles industry was down 32% on last year, however, the immediate current activity is not necessarily a guide to the mid-term future. Nor is it possible to predict the results for the year ending 30 June 2020. There are expected to be some asset revaluations to property, inventory and receivables.” 
