Corona help for used car dealers

by Halit Özdemir

The renewed lockdown in the wake of the Corona pandemic also poses new questions for car dealers. We have summarized in this contribution, what you must know now necessarily around financial Corona assistance from the state and other support to receive.

Lockdown forces used car dealers to close your salesrooms

While the car trade online, for example on car exchanges, takes place further, KFZ dealers are forced to close your salesrooms. In many places, however, car workshops may remain open. In some cases, these workshops may also be used to organize the collection of purchased cars, for example via a car auction. However, this depends on the respective federal states.

Car dealerships receive state support

The state supports businesses during this time with so-called "Corona aid". Many businesses qualify for these aids. From the small used car dealer to the large car dealership group. Which aids you can take up you experience here.

What are corona aids?

There are two different types of corona aids: The monthly aids (for example: November & December aids) and bridging aids (currently bridging aids II & III). Under these terms are the financial supports of the state summarized. 

What is the difference between November, December and bridging aids?

Bridging aids cover part of the fixed costs (eg rent, depreciation and financing costs, and a contractor's salary). The November and December aid are often only the industries hotel, catering and the like to, since these were already closed at the beginning of November by a corresponding decision of the countries.

Most companies in the automotive sector (such as car dealerships, used car dealers, exporters of dealer vehicles) concern the bridging aid II & III, since they have been closed since 16.12. 2020 had to remain closed.

Monthly assistance (e.g. December assistance)

Who receives the monthly assistance?

Car dealerships and car dealers in general are usually not eligible for this assistance, since only businesses and solo self-employed persons receive the assistance, which were affected by the closures in early November.  

Used car dealers receive bridge assistance

Who receives the bridge assistance?

Car dealerships, independent car dealers, automotive repair shops and many other businesses that experience a decline in sales due to Corona can receive the bridge assistance.

How can I prove a decline in sales due to Corona?

There are three ways to prove a sales decline due to Corona:

Possibility 1: You have experienced at least a 50% sales decline for two consecutive months.

Possibility 2: You must demonstrate an average sales decline of at least 30% from April to August 2020.

Possibility 3: You averaged 40% lower sales between November and December 2020.

Go to used car auctions

What is the difference between the bridging assistance II and III?

The bridging assistance II and III differs in content nothing, except the period for which they apply. The bridging assistance II is valid for September to December 2020, the bridging assistance III from January to June 2021.

How much money do you get as a used car dealer bridging assistance?

As a bridging assistance you usually receive 200,000 EUR. In special cases, the support can be increased up to 500,000 EUR. Here, however, according to the current status, only actually uncovered fixed costs are reimbursed.

What are fixed costs that are reimbursed?

Typical fixed costs that are reimbursed are rents, financing costs and depreciation (up to 50%). The amount of reimbursement is based on your decrease in sales:    

Decline in sales  0% - 30%  =  0%  Fixed cost reimbursement

Decline in sales  31% - 50%  =  40%   Fixed cost reimbursement

Decline in sales  51% - 70%  =  60%  Fixed cost reimbursement

Decline in sales  71% - 100%  =  90%  Fixed cost reimbursement

Example: You have in December 2020 a turnover of 10. 000 EUR after you still had a turnover of 50,000 EUR in December 2019. This corresponds to a decrease in sales of 80% which is why you would be reimbursed 90% of your fixed costs, as far as your fixed costs are not covered by the actual generated sales.

How do I apply for the bridging aid?

The aid must be applied for exclusively through a so-called examining third party, for example tax advisors and lawyers. The costs of this application may also be eligible for reimbursement.

What is the maximum amount of money I can receive as a used car dealer?

In total, there are no limits to the payout. However, there are different responsibilities for different amounts of payouts. Disbursements up to 1 million EUR, however, you can receive without additional examination of the federal government or the EU. 

What is there to consider?

It is important that other government benefits are credited. That is the bridging assistance, short-time allowance and social benefits can reduce the amounts you finally receive.