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May 13, 2020 01:49 PM

AIA survey: 77% of Canadian aftermarket hurt by COVID-19

Tire Business Staff
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    OTTAWA, Ontario — The COVID-19 pandemic has had a moderate to severe impact on 77% of automotive aftermarket businesses in Canada, according to an online survey conducted by the Automotive Industries Association (AIA) of Canada.

    Survey respondents are facing cash-flow issues and will find it increasingly difficult to keep employees on the payroll if the economy does not open up soon, according to the survey results.

    The AIA surveyed 363 automotive aftermarket business owners across Canada who were invited to complete an online survey between April 20 and May 8.

    The 363 respondents included 183 collision repair shops, 71 mechanical and tire service businesses, 28 wholesalers, 18 warehouse distributors, 17 parts manufacturers and 11 major retailers.

    At time of the survey launch, the industry was in its second month of dealing with the pandemic, the AIA noted, during which a majority of aftermarket businesses (61%) reported their businesses were "very disrupted."

    Half the respondents reported a revenue loss of 50% or more in April and about 41% were forecasting a loss of 50% or more in May.

    The business outlook is highly uncertain for survey respondents with about 42% thinking that a recovery is possible in the coming months while 30% expect the situation to get worse, the AIA reported.

    Only about 6% of respondents said they believe business will return to pre-COVID conditions, while 9% of respondents raised doubts that they will stay in business.

    The impact of reduced business was reflected in the fact that more than half the respondents (61%) had to lay off staff.

    Only 15% businesses were able to (or have attempted to) rehire previously laid-off staff, as situation that the AIA said reflects poorly on the Canada Emergency Wage Subsidy (CEWS) offered by the federal government.

    According to the Canadian Federation of Independent Business (CFIB), 30% of small businesses were able to avoid layoffs or recall employees who were already laid off through the government assistance funds.

    "This indicates that either the measures have not been effective for the aftermarket or that the businesses were unable to apply for them," the AIA said, noting that according to the CFIB report, one in five businesses does not qualify for Canada Emergency Business Accounts, as those with payrolls under $50,000 are not eligible for support.

    More than half of the AIA survey respondent businesses (191) had seven to 25 employees; 115 respondents claimed one to six employees while the rest had more than 25 employees.

    The business environment outlook is highly uncertain, according to the survey respondents, with 42% thinking that their impacted businesses will start to see a recovery in the next two to three months. This is on the proviso that the virus outbreak is under control, lock downs are eased and demand also returns, the AIA said.

    Another 30% of respondents believe business conditions will only get worse and that it may take more than a year for impacted businesses to return to pre-COVID conditions.

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