Can I continue to operate my dealership with the statewide and local stay at home orders?

CNCDA website provided the following information:

On March 16, local jurisdictions began issuing “Shelter in Place” orders that restrict personal and business activity to “flatten the curve” of the coronavirus pandemic. On March 19, Governor Newsom issued a statewide “Stay Home” order. All of these orders allow dealerships to continue operating their service and parts departments. The status of vehicle sales depends on your local jurisdiction.

On April 17, the federal government revised its guidance on the essential critical infrastructure workforce. The revised guidance specifically states that the following workers are essential: “Workers critical to the manufacturing, distribution, sales, rental, leasing, repair, and maintenance of vehicles and other transportation equipment (including electric vehicle charging stations) and the supply chains that enable these operations to facilitate continuity of travel-related operations for essential workers.” (click here) California’s statewide order incorporates by reference this federal guidance. (click here) Therefore, it appears that California’s statewide order allows vehicle sales to continue, so long as dealerships follow required health guidelines (such as social distancing).

That being said, the statewide order establishes minimum requirements. Many jurisdictions have adopted local “shelter in place” orders that restrict vehicle sales to online with remote deliveries only, and these restrictions are unaffected by the updated federal guidance. As of April 17, the following represents our best understanding on the status of vehicle sales throughout California:

  • Online Sales Only. At this time, the following jurisdictions only allow online vehicle sales with off-site deliveries at critical businesses or customer residences (no in-person sales are permitted; showrooms must be closed):
    • Los Angeles County (click here)
    • City of Los Angeles (Although the April 1 revision to LA City order does not specifically allow vehicle sales, the Greater Los Angeles New Car Dealers Association has received confirmation from the LA City Attorney’s office that the order is not intended to prohibit remote vehicle deliveries)
    • Bay Area (click here)
      • Alameda County;
      • Contra Costa County;
      • Marin County;
      • Santa Clara County;
      • San Francisco;
      • San Mateo County;
      • City of Berkeley.
    • City of Fresno (click here)
    • Ventura County (click here)
  • Online Sales and Restricted In-Person Sales. If a local jurisdiction does not have a “shelter in place” order that restricts vehicle sales, the statewide order applies and the statewide order allows vehicle sales. However, any dealership sales department that is open must adhere to social distancing requirements as well as CDC health and safety guidance.

Social Distancing and Health Requirements. All dealership departments that are open (service, parts, and sales, if applicable) must adhere to social distancing requirements and CDC health and safety guidance. These requirements are not trivial – they often require substantial changes to dealership operations. Many jurisdictions are imposing specific requirements. As a best practice, you should consider implementing a social distancing protocol at your dealership, even if such a protocol is not strictly required by your local jurisdiction. Visit your local jurisdiction’s website to learn more about requirements specific to your jurisdiction.

Finally, dealers should note that there continues to be substantial confusion on vehicle sales at the local level. In the event you receive an order to shut down, you should follow it. However, you may want maintain copies of the state order and the federal guidance and present such documents to law enforcement to show them that you are operating in compliance with the state order. Please note that this will not protect you if you operate in a jurisdiction covered by a local order that restricts vehicle sales, discussed above.

To provide dealers with specific guidance on online sales, remote work, and home deliveries, CNCDA asked the Arent Fox law firm to prepare a memorandum on this issue.

CNCDA Members can download a copy of the Arent Fox memo on online sales via CNCDA Comply.

Finally, CNCDA asks its dealers to continue to use their best judgment on vehicle sales. Unfortunately, the reality of our current situation is that the transmission of the disease and economic activity are inversely related. When we speak to local health officials a common refrain is that “if something can be delayed a month or two, delay it a month or two.” Please take this advice to heart when implementing procedures at your dealership.

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