May 7, 2020 — In an internal email this morning, Cox Automotive President and CEO Sandy Schwartz announced the company is implementing a series of cost-cutting moves that include furloughing more than 12,500 employees beginning May 17 due to the financial impact created by COVID-19.
The furloughs will impact about 36% of Cox Automotive’s entire workforce. and could last as long as four months.
Most of the furloughs will occur within Manheim, with more than half coming from the part-time ranks including drivers or others that provide support on auction sales days.
Also included in the 12,500 are approximately 4,600 full-time employees who cannot perform their tasks remotely or that have had their workloads reduced because of the pandemic.
Further expense cuts include Scwhartz and Cox Chairman Alex Taylor forgoing their salaries throughout the course of the crisis. Additionally, the executive leadership team is taking a 25% pay cut while Cox Automotive officers at the vice president and higher levels will take 15% pay cuts.
In his note, Schwartz writes, “As I wrote a few weeks ago, we’ve done everything we can to withstand this temporary shock to our operations. Our quick cost containment actions and the generosity of our owners have forestalled the need for payroll cuts – until now.
“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. That’s why we now have to finally take some of the more painful steps other companies began weeks ago in order to cut a big portion of our payroll for the duration of the COVID-19 related economic crisis.”
Cox’s moves follow cuts made by KAR Auction Services that were announced in April that included 11,000 furloughs along with salary deferral and reductions.
KAR also announced this morning it is suspending its quarterly dividend.