Automotive retailers are cutting executive pay and laying off or furloughing thousands of workers as U.S. auto sales plummet amid the coronavirus pandemic.
AutoNation, the nation's largest U.S. auto dealership chain, is furloughing 7,000 employees, slashing executive pay and postponing more than $50 million of capital spending as its year-over-year sales declined by about 50% last month, according to a Friday filing with the U.S. Securities and Exchange Commission.
Shares of AutoNation were down 2.7% during the final hour of trading to $24.53. The stock is down 49.7% this year.
The company, as automakers did earlier in the week, cited "shelter-in-place" or "stay-at-home" orders from federal, state, and local governments as reasons for the decline in sales: "The COVID-19 pandemic has adversely impacted, and is expected to continue to adversely impact, AutoNation's operations," AutoNation said in the SEC filing.
J.D. Power earlier in the week forecast retail sales this month to decline by about 80% compared with April 2019 due to stay-at-home orders and COVID-19′s overall impact on the economy and consumer confidence. Retail sales do not include sales to fleet customers such as the government or businesses.
AutoNation said it currently has about $1.1 billion of liquidity, including more than $400 million of cash and about $700 million in its revolving credit facility. The company employs 26,000 people at more than 300 locations in 18 states, according to its website.
AutoNation's actions follow similar cuts from other publicly traded auto retailers.
Group 1 Automotive last week said it would reduce executive salaries and furlough 3,000 U.S. employees for a 30-day period with an option for a second 30-day period due to "the sudden dramatic decrease in business activities and the uncertain duration of this decline."
Shares of Group 1 were down about 6.6% during the final hour of trading on Friday to $35.48. Shares of Penske were down 6.7% to $22.89.