When he took the helm of the Canadian Automobile Dealers Association, President & CEO Tim Reuss could never have foreseen how dramatic his early days would prove to be. Canadian auto dealer caught up with him in the midst of the pandemic to find out how the association was working for dealers during the pandemic. This is an edited version of a video interview in March.
Editor, Todd Phillips: There’s a lot going on, so why don’t you update dealers really on what we can expect to see in the coming months, what CADA is working on right now.
Tim Reuss, President & CEO, CADA: As we’re working through this crisis, we are working on five main aspects, the first one being health and safety. The next three are business related: liquidity, employment and recovery. And then being able to provide our dealers with relevant and timely information on all those topics.
So for health and safety, that’s the foremost aspect that we’re currently focused on. As dealers are being classified essential services across the country for repair and maintenance operations to keep the vital transportation infrastructure of the country running, they’re keeping their service and maintenance operations open, and obviously they need to consider health and safety protocols while doing so.
We’re in the process right now of gathering a lot of best practices from across the country and putting those on our website so that dealers can see what some of the dealerships, some of the solutions they have come up with.
CAD: Health and safety is at the forefront of everyone’s mind. But then you move into the next aspect. Businesses have been profoundly impacted by this as a result of mandatory shutdowns and diminished business demand. Can you speak a bit about the liquidity aspects of trying to help dealers?
REUSS: So the first aspect that we focused on right out of the bat was liquidity. Because as businesses start slowing down tremendously all across the country, all sectors, you’re going to start seeing a cash crunch in businesses. And we’ve been able to achieve quite a few things through our lobby work in Ottawa, both on our own and building coalitions with other associations across Canada, like the Canadian Chamber of Commerce, the first one being HST and GST deferrals.
As you know, the government has deferred basically all tax payments, both private and HST and GST for the next couple of months. That’s a huge influx of cash that doesn’t have to go out of the dealerships right away. We’re also working with all lending institutions in Canada — that encompasses big banks but also the captive lenders from the OEMs — to provide dealers relief on floor plan mortgages and other loans. And here we have seen substantial progress in the last two weeks from different entities providing different sorts of relief to our dealer members.
Tim Reuss, President & CEO, CADA
The other aspect is we’ve also been able to secure new access to credit for our dealers, some of them through a small and medium sized enterprise loan and guarantee programs. That one unfortunately is still right now capped to only small and medium size businesses and a lot of our dealers do not currently qualify for those and we’re working with the government to also get that clarified. Then the last piece, and this is a larger undertaking that we have focused on, is to reactivate, if possible, a secured credit lending facility.
This was a program that was instituted back in 2008 during the financial crisis. It was a $13 billion program that was put in place to provide liquidity to the lending automotive, specifically automotive lending institutions being banks and captives so that they in turn could turn around and provide that liquidity in the form of relief and aid and support to dealers.
CAD: How are the dealers dealing with the human capital — their teams during all of this?
Reuss: A prime focus of a lot of our dealer members right now is how can they support their staff members and their employees in this difficult time? I’m happy to say that on the employment front, we’ve been able to get some very important resources and wins, if you want to call it that, out the door as quickly as possible. The first one and probably the most important one was a CADA 360 employee benefit program. As you might know, CADA offers an employee benefit program. Roughly 64% of rooftops in Canada are on that employee benefit program, and we were able to announce a premium waiver for April and May for all dealers on the employee benefits program.
“It’s been incredible how the teams come together in this time of crisis”.
– Tim Reuss, President & CEO, CADA
That means on the first side, that immediately provides liquidity to the dealer because they do not have to pay those premiums in those two months, but most importantly it enables them to extend the benefits coverage of their employees that might be affected by temporary layoffs.
I’d like to just briefly thank the dealer committee and in particular its chairman, Ken Zender, that worked on this, and the CADA executive committee and our chairman, Mike Stollery for their leadership in getting this done so quickly. As well as their whole team of CADA 360, led by Marvin Karges and Karen O’Connell and Canada Life in putting this together in such a short period of time. We had a very quick turnaround and we’re able to provide that to our dealer members within a very short period of time.
Another big program is the Canadian Emergency Wage Subsidy. That was originally the program by which the federal government supports businesses for them to be able to maintain workers on their payroll. Initially it was only a very small percentage of payroll that would have been covered by the federal government. That got increased to 75% and that was announced the last Friday of March.
The dealers were at risk of actually being excluded from that because it was geared initially, only to small and medium sized businesses and they had a maximum capital requirement in there, that due to the way our dealers are structured from a capital perspective and the inventories that they carry into financing obligations. Almost all dealers would have not qualified for that. So we worked tirelessly over the weekend, the whole team and with all of our dealers.
We had a grassroots letter writing campaign, and I’m happy to say that over the weekend, over 1,000 letters were written across Canada to their respective MPs. Our voice was heard in Ottawa together, with other industries, and as you know a few days ago they announced the expansion of that wage subsidy program basically to all businesses that have seen a reduction of 30% of the revenue.
So with that, that means all of our dealers will be covered with that, at least have access to that emergency wage subsidy program. And I’d like to do a shout out to our government here on this one, we’re putting out a press release today thanking the federal government for their work on this. They are doing a tremendous job and in a very short period of time, they’re basically trying to build a plane while it’s flying and they took the time to listen to us and were able to then expand the rules and requirements around this. This is very big news and important news for our dealer members.
CAD: We’re seeing a lot of organizations, governments mobilize much more quickly than we’ve ever seen. Now, that’s going to be equally important to maintain that dialogue and involve governments in the recovery. The immediate focus has been on the things you’ve talked about, health and safety and liquidity and short term wage subsidies, but beyond this we’re going to need a longer plan in place for when the industry rebounds.
Reuss: Correct. So on that front, we’re already in an intensive dialogue with the OEMs and certain government officials on starting to look at what could help the recovery phase. One specific idea that we are floating with them and discussing with them is a scrappage program that we had initiated discussions with them even before the crisis, together with the manufacturers association, GAC and CVMA. It could be the right time to start designing that program. Not to put it in place now because right now it doesn’t serve a purpose in the middle of a crisis. But to have it ready so that it can be implemented in a month or two months, once a recovery period starts. So we’re working very, very closely there with the government. There’s a couple of other ideas that this is still too early to discuss publicly about that we’re floating with them so that when the time comes that we need and we’re ready to start getting into the recovery phase, we’re ready to go.
The last aspect I wanted to bring across in our conversation today is the whole information piece, which is important, as I mentioned initially, to provide accurate and relevant and helpful information to all of our dealer members. Go to our website, CADA.ca and we have a special COVID-19 page there. You will find all of the resources at your disposal. And just as important as the information sharing and cooperation that’s currently happening with all of the provincial associations, so a shout out here to all of the provincial associations, we’ve been working very, very closely together these last few days. We have a COVID coordination call every Friday. We have daily phone calls with all of them and the whole team has really come together across the country here.
We’re also leveraging all of our contacts that we have with other countries. So we’re talking to our sister associations in China, in the US, and France, and Italy, and in Spain. Those are invaluable resources, especially China now, coming back to your point about recovery. They are starting to go into that phase so there are valuable lessons to be learned from what worked or didn’t work over there that we’re obviously trying to also Canadianize and then use for our purposes. We have constant contact with our colleagues down in the U.S. with NADA and some of the things they did, also around the definition, for example, of essential services.
CAD: You mentioned the CADA COVID-19 resource page. I know CADA has also hosted webinars that are by Tim Ryan and others to bring in legal experts, and employment experts to help dealers get a handle on something that’s so unprecedented and so many uncharted waters. We’re going to continue that obviously with Canadian auto dealer to pass on whatever messaging we can.
Reuss: Thank you very much, Todd and thanks to Canadian auto dealer for getting the message out there, to all our dealer members. And remember please, dealers, if you have any questions, go to our website or COVID-19 page. You have resources there, provincial resources, federal resources, best practices tips resources. There’s a full, very comprehensive guide also put together by Chuck Seguin of things you should consider in the crisis in your business from all aspects of the business. There’s resources that we’ve gathered from worldwide also from McKinsey on how to deal with crises so there’s a lot of resources there. There’s a frequently asked questions section in there on employment issues and everything else, webinars, podcasts. So we’ll be adding more and more content to that site as we progress.
CAD: A lot of people support the association with their dues and your dealer members know you’re doing a lot of advocacy and lobbying work but in a case like this, maybe a shout out to your own team to just show the depth of support they put in building these resources. I’m sure there’s some sleepless nights.
Reuss: It’s been incredible how the teams come together in this time of crisis. They say that a crisis brings into focus the character of individuals, organizations and sometimes even countries. And I can definitely say that when it comes to CADA, it’s brought into focus the tremendous dedication that everybody in our team has for what they’re doing and trying to get solutions and help out to our dealer members as best we can. Everybody’s been working tirelessly, day and night, sometimes very late into the night, as you can imagine.
