Cox Automotive, a dealership-focused company with more than 20 business units providing an array of services, is furloughing more than 12,500 employees worldwide because of the COVID-19 pandemic’s impact on business.
The laid-off employees represent 38% of the Cox Automotive workforce. Most of them (10,000) are in the U.S.
The furloughs begin May 17. They are expected to extend up to 16 weeks. People affected will remain Cox Automotive employees, retaining existing health-care benefits the company funds.
Because of sharp declines in wholesale vehicle transactions, the closing of physical Manheim auctions and the subsequent move to an all-digital auction format in the U.S., nearly 87% of the furloughed U.S. employees are full-time and part-time Manheim workers.
Cox Automotive’s holdings also include Autotrader, Kelley Blue Book, Dealer.com, Dealertrack, vAuto and VinSolutions.
Cox Automotive CEO and President Sandy Swartz calls the furloughs difficult but necessary to temporarily reduce payroll costs.
“The automotive industry is beginning to show some signs of life but we’re expecting a slow recovery and a long road back for our revenue,” he says in a message to employees this morning.
In addition to the furloughs, other cost-cutting moves include:
- Schwartz and Cox Enterprises CEO Alex Taylor will voluntarily forgo their full base salaries for the duration of the COVID-19 pandemic.
- The company will implement tiered reductions in pay for senior executives. The reductions begin at 15% for senior leadership with titles of vice president and above, and rise to 25% for the executive leadership team.
- Some hourly employees will experience a reduction in work hours and resulting pay.
- The company has slashed its marketing budget, eliminated the use of most of its contractors and consultants and postponed or canceled numerous events and sponsorships.
In addressing employees today, Schwartz added: “I could say a lot of things about this being the best-case scenario, but nothing will change that furloughs and pay cuts are painful and represent real sacrifices for many families.
“We don’t take lightly the broad impact these actions will have on everyone; the toll from COVID-19 is already so high, and this adds more uncertainty. If there were another way, I promise we would have done it.”