One sector of the American economy that has been particularly affected by the SARS-CoV-2 coronavirus outbreak is the auto industry. Hammering home that reality, AutoNation (NYSE:AN) admitted in a regulatory document filed on Thursday that its sales in the final two weeks of March dropped by around 50% on a year-over-year basis.
In the document, which was essentially an update of the vehicle retailer's business in the wake of the pandemic, the company wrote of its "significant" declines in both the new and used automobile categories.
"Markets from which we derive approximately 95% of our total revenue are currently under extensive 'shelter in place' or 'stay at home' orders from federal, state, and local governments, which significantly restrict our business operations, in particular our sales activities," AutoNation explained.
As a result, the company is effectively playing defense in an attempt to ride out the crisis. It detailed a series of rationalization measures it's taking during the period. These include putting roughly 7,000 of its employees on unpaid leave while temporarily reducing the salaries of its top managers. Its board of directors is also foregoing its retainer fee.
On the financial side, AutoNation said that it is delaying more than $50 million worth of planned capital expenditures through this current second quarter and cutting its advertising expenditures by around 50% in the same period.
The company did point out that it has approximately $400 million in cash and $700 million at its disposal under a revolving credit facility. It did not provide any detail about how much of either it might deploy.
On Friday, AutoNation's shares sank by nearly 2.5%. This was deeper than the decreases of numerous top stocks, as well as the major market indexes that day.