Sunday, April 19, 2020

Auto Dealers Urge DTI to Allow Them to Re-Open


UPDATED: The DTI responds. See response below. (4/25).

The Philippine Automotive Dealers Association (PADA) has made an urgent appeal to the Department of Trade and Industry (DTI) to allow them to re-open on a skeletal workforce basis by this week.

In a letter addressed to DTI Secretary Ramon Lopez (letter is shown in full below), PADA believes that automotive dealerships and service centers should be classified as essential services, particularly for vehicle repair and sale of spare parts. PADA’s dealer members have been receiving calls for emergency car repairs particularly from front liners. However due to the guidelines set in the Enhanced Community Quarantine (ECQ), they’ve had to decline these repair requests.

But more than just providing a service to front liners, PADA also paints a very grim picture of what auto dealerships face during the COVID-19 pandemic.

After the Taal Volcano ash fall last January (yes, that also happened), the ECQ also halted auto dealership operations for more than 30 days now. With that, PADA says some dealers will face significant liquidity issues in the short- and medium-term; some may even run out of cash “within a matter of weeks.”

And while the DTI moved to suspend the collection of rent during the period of ECQ under Memorandum Circular 20-12, it doesn’t cover car dealerships because they’re been classified as Large Enterprises, and are automatically disqualified to avail of DTI’s concessions on commercial rent. Rent, along with equipment forms a large chunk of a dealership’s fixed costs says PADA—as much as 70 percent of their gross profit in some cases.

For PADA’s part, they’re appealing to the DTI to allow them to re-open on “by appointment” and “limited” engagement for aftersales service and parts sales with the following conditions:
  • Skeletal Force Attendance with just 50 percent of service staff reporting on a rotational basis. Workers will be provided shuttles with designated pick-up points.
  • Each technician will work one bay apart to ensure physical distancing.
  • Strict sanitation will be in place with technicians wearing proper PPE and vehicles (both exterior and interior) disinfected
  • Customers will be required to wear face masks, and will undergo temperature scans. Service receptions will have a clear plastic divider.
UPDATE: In connection with the Philippine Automotive Dealers Association (PADA)’s plea, the U.S. has now classified its auto retailers to be “essential workers.”

In a Bloomberg report, U.S. federal guidelines were revised to include “workers critical to the manufacturing, distribution, sales, rental, leasing, repair and maintenance of vehicles and other transportation equipment” as essential. This is to help other essential workers such as medical front liners to travel continually.

However, it’s important to note that this is just a guideline and should not be considered as a government directive or standard. The U.S. government will leave it to state and local officials on how they will balance public health and safety with the need to maintain critical infrastructure.

UPDATE 2: DTI Secretary Ramon Lopez has answered the PADA letter and has said that in areas covered by the Enhanced Community Quarantine (ECQ), the automotive sector is not included. Citing the need to stop the spread of COVID-19, the DTI is not allowing auto dealerships and service centers to re-open.

That said, in areas covered by the General Community Quarantine, selected services including auto repair will be allowed to re-open.



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