Group 1 Auto to furlough 5,800 workers, cut exec pay
Group 1 Automotive, the nation’s fourth-largest dealership group, plans to furlough 5,800 employees globally and lower executive compensation to mitigate the financial impact of the coronavirus pandemic.
The Houston company said Wednesday evening it would furlough 3,000 operating and staff employees in the U.S. for 30 days, and may keep them furloughed for another 30 days. It is also furloughing 2,800 employees in the United Kingdom for 21 days.
The furloughs affect roughly a third of the 15,300 full-time, part-time and temporary employees the company reported having at the end of 2019. It said 11,300 of those workers were in the U.S. and 3,000 in the U.K.
Group 1 also is reducing its executive compensation until further notice. Chief Executive Earl Hesterberg will take a 50 percent pay cut, the presidents of the U.S. and Brazilian operations will take a 35 percent pay cut, senior vice presidents will take a 20 percent pay cut and other corporate and field support personnel will take a 10 percent pay cut. In addition, cash retainer fees for the company’s board will be eliminated.
"The sudden impact of this medical and human emergency is clearly disrupting most businesses," Hesterberg said. "This is requiring us to take many severe and regrettable actions to re-size our business to minimal activity levels in the near term. I believe that the swift and decisive actions that we are taking will enable us to recover quickly when the market recovers as it undoubtedly will."
Group 1 said many of its dealerships are closed or severely reduced in all of its major markets. The company was forced to close its dealerships in the United Kingdom and Brazil, and nearly all of its U.S. dealerships are located in markets with stay-at-home orders or other travel restrictions.
Sales of new and used vehicles plunged starting March 6, and are down about 50 percent to 70 percent from normal March sales. Group 1 said this sales decline is consistent with other dealership groups. The company’s e-commerce platform — Acceleride — is seeing increased use during the pandemic.
The company said its auto service and repair facilities remain open to provide essential services to customers. Service levels have fallen, however, as there are fewer cars on the road and as consumers concerned about the virus stay home.
Group 1 owns and operates 186 automotive dealerships, 242 franchise dealerships and 49 collision centers in the U.S., U.K. and Brazil.