AutoNation Inc., the nation’s largest dealership group, returned $77 million in loans it received through the federal government’s Paycheck Protection Program for 83 stores across the country, while Penske Automotive Group Inc. also returned loans it received, the companies told Automotive News on Friday.
The Washington Post was first to report Friday that AutoNation would return the loans. The Post said AutoNation had received nearly $95 million in loans, citing internal documents and company employees.
AutoNation Chief Marketing Officer Marc Cannon told Automotive News that the figure cited by The Post was incorrect and that the correct loan amount was $77 million. He said AutoNation held a board meeting at 11 a.m. EDT Thursday, shortly after new guidelines from the Small Business Administration were issued, and decided to cancel all of the retailer’s loan applications and return all funds by May 7.
Penske Automotive Group, the nation’s second-largest new-vehicle retailer, said in a statement issued to Automotive News that it informed its lender on Wednesday — before the new guidance was issued — that it would not participate in the program and late Friday had completed returning the loan proceeds to its lender. Penske declined to disclose the loan amount it received.
New guidance from the SBA on Thursday said large companies would have to certify they have a need for the funding through the coronavirus relief package. The program provides small businesses with money to pay employee payroll and benefit costs for eight weeks, plus certain other expenses. The loans can be fully forgiven if companies meet certain requirements.
The new guidance in part said, “It is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith.”
Borrowers that applied for loans under the program before guidance was updated and that repay loans in full by May 7 “will be deemed by SBA to have made the required certification in good faith,” the agency said.
AutoNation, in a statement, said it “was clearly eligible and applied on behalf of the 7,000 employees furloughed caused by the COVID-19 crisis. AutoNation intended to rehire all 7,000 associates under the PPP program as encouraged by the government and designed to get individuals back to work. From the beginning, AutoNation decided that all PPP funds would be used only for our employees and nothing else.”
An AutoNation employee told The Post that the loans were “an obscene amount for any company to take out of this fund that was intended to help keep our communities intact.”
Penske furloughed 5,300 U.S. employees, or about 43 percent of its U.S. dealership work force, at the end of March following significant declines in business as a result of the coronavirus, the company said in its statement.
“Based on the guidance that was available at the time, our individual franchised dealerships were eligible to participate in the Paycheck Protection Program,” the statement said. “The intention was to use monies received by the individual franchises to return furloughed employees to payroll.”
Exact figures on how many Penske employees continue on furloughs weren’t provided to Automotive News, though Penske Automotive spokesman Tony Pordon said some of the 5,300 have returned to work.
Several other publicly traded auto retailers opted not to participate in the program, with some confirming to Automotive News that they had not applied.
Group 1 Automotive Inc. considered the Paycheck Protection Program, “but as a large company decided against pursuing the opportunity,” said Pete DeLongchamps, Group 1’s senior vice president of manufacturer relations, financial services and public affairs.
And Asbury Automotive Group Inc. did not apply for the loan program because it “did not feel the company qualified for the program based on the certification requirements,” according to a spokeswoman.
Lithia Motors Inc. also indicated it passed. “Lithia Motors has not and will not take any money from the SBA PPP loan program,” a spokesman said in an email.
Sonic Automotive Inc. and CarMax Inc., the nation’s largest used-vehicle retailer, did not respond to requests for comment.
Some large companies that received loans under the program, which quickly ran out of funds after awarding $349 billion, have faced backlash and have opted to pay back all money. Another $310 billion in funding has been authorized for the program.
This month, HyreCar Inc., a car-sharing marketplace for ride-hail drivers, said it had received $2 million in funds through the program.
HyreCar did not respond to requests for comment.
AutoWeb Inc., a California automotive marketing services company, declined to comment Friday when asked by Automotive News whether it would repay its nearly $1.4 million loan received through the program.
AutoWeb announced it had received the loan a week ago, and CEO Jared Rowe said in a statement that the loan “will allow us to continue meeting our payroll needs and ensure that our business remains fully operational. With these initiatives in place, we are maintaining employment across our organization to minimize business disruption and will continue to meet the needs of our dealer and OEM customers.”
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