Penske Automotive to Cut Executive Pay, Furlough Employees, Postpone Capital Expenditures
Penske Automotive Group said it is slashing executive pay, furloughing employees, postponing $150 million in capital expenditures, and taking a range of other steps to "to help mitigate the financial and operational impact of COVID-19," reports Automotive News. CEO Roger Penske and President Robert Kurnick will accept no salary for the duration of the coronavirus outbreak, while executives and managers across the company also are taking pay cuts, Penske spokesman Anthony Pordon said Monday. Pordon said Penske was not disclosing how many employees would be furloughed, nor how many would see reductions in compensation, or how much. The company also is freezing hiring. In addition, the board of directors has waived its cash compensation for six months, the second-largest U.S. dealership group said in a statement. "The COVID-19 crisis is impacting our operations requiring us to take swift and decisive action to address declining business levels," Penske said in the statement. "I am confident the actions we are taking will help our business overcome these challenges." Read more here.
Trump Could Roll Back Obama MPG Rules as Soon as Tuesday
The Trump administration is expected to finalize its plan to roll back stringent gas-mileage rules enacted by the Obama administration as soon as Tuesday, reports The Detroit News. The administration's plan is expected to call for reducing the required annual fleetwide average mpg increases for carmakers for model years 2021-2026 from the original 5% that would have required under the Obama-era rules, to a less-stringent 1.5%. The White House had initially proposed a freeze in gas mileage rates at 2020 levels until 2026, but it appears to be retrenching slightly to the current proposed 1.5% proposal for annual increases. Carmakers had asked Trump to take another look at the fuel-economy rules after he moved into the White House in 2017. The rules were put in place by the Obama administration in the wake of the auto bailouts of 2008 and 2009, when the federal government had maximum leverage over the industry after giving $51 billion and $12.5 billion respectively in federal bailouts to GM and Chrysler in 2008 and 2009. Ford Motor Co. did not take federal money. Read more here.
Automakers Continue with Plans to Restart U.S. Production as Trump Extends Coronavirus Guidelines
Some automakers are continuing with plans to restart U.S. vehicle production next month despite President Donald Trump on Sunday extending national social-distancing guidelines through April, reports CNBC. Fiat Chrysler, Toyota Motor, and Honda Motor are continuing with such plans as executives “monitor” or “assess” the situation, spokespeople for the companies told CNBC on Monday. The automakers would be allowed to reopen plants despite Trump’s extension because it is a guideline, not an order. The federal government has been relying on states to enact their own orders to limit or ban automotive operations and determine if they are an “essential” businesses during the COVID-19 outbreak. The regulations vary state by state. The impact of the state orders on automotive manufacturing, aside from extensions, is not expected to have any further effect on the industry, according to Tyson Jominy, vice president of data and analytics at J.D. Power. Read more here.
National Average for Gas Prices Tumbles Below $2 a Gallon
With tens of millions of Americans sheltering in place, a growing glut of fuel has translated into a rapid plunge in gas prices, pumps across the country now dipping below an average $2 a gallon, according to tracking service GasBuddy.com. The Detroit Bureau reports that how much further the figures can fall remains uncertain, but there are some service stations now pumping regular unleaded for as little $1.17 a gallon. There is a “strong possibility” that fuel could drop below the $1 mark in many locations, according to GasBuddy Analyst Patrick DeHaan. “I don’t think I’ve ever seen such a collapse in prices, even including the Great Recession,” said DeHaan. “What we’re witnessing is easily going to go down as the great collapse in oil demand, and for motorists hurrying to fill up today, they’re wasting their money as prices will continue to drop in the days ahead.” Global petroleum prices began tumbling last month due to a feud between Saudi Arabia and Russia, but the downturn accelerated as the coronavirus began to spread across the United States and more and more locations asked citizens to shelter in place or work from home. Read more here.
FCA to Defer 20% of Salaried Workers' Pay; Manley to Take 50% Cut
Fiat Chrysler Automobiles is deferring 20 percent of salaried workers' pay from April through June and CEO Mike Manley will have his salary cut by half as the company deals with the fallout of the coronavirus pandemic, reports Automotive News. Manley said in a note to employees Monday that, starting April 1, he will receive half his normal pay for the next three months. The other 19 members of FCA's Group Executive Council will take a 30 percent cut. FCA Group Chairman John Elkann and other members of the board of directors will receive no compensation for the rest of the year, an FCA spokesman said. Manley said the company will ask most salaried employees globally who are "not impacted by local downtime plans" to take a 20 percent salary deferment. Manley said the process will vary by country and that "agreements may be required." The FCA spokesman said the salaried cuts will last three months. It wasn't immediately clear when the deferred earnings would be paid out. Read more here.
Added Session TODAY: Federal Stimulus Information – How the Program Can Benefit You and Your Employees
If you missed the first session, join AIADA's AutoTalk on Tuesday, March 31at 12:00 p.m. EDT to hear Part Two of our COVID-19 series as experts from Moss Adams Automotive and Dealer Services Group talk to the Federal Stimulus package and explain how the program can benefit you and your employees. This will be a recording of the first session.
Topics covered include:
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Latest information on Federal stimulus package and key tax provisions
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Small Business Administration Loan Programs
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Federal tax filing and payment deadline relief
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Tax Update on The Families First Coronavirus Response Act
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