Public turns on AutoNation, worth $3b, set to receive $95 mil in PPP funds; company vows to return

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The coronavirus relief loans program drafted by Congress to keep small businesses afloat amid the ongoing pandemic are being used by an increasing number of large businesses and institutions, from Harvard University to Shake Shack and now AutoNation.

On Friday, a couple of days after word emerged that Harvard University had collected its own bailout despite already boasting a $40 billion endowment, The Washington Post revealed that the automotive retailer AutoNation, which was worth over $11 billion as of 2019, had also collected a bailout.

“AutoNation, a national network of auto sellers, received more than $77 million in federal small-business funds despite being a company worth billions that employed more than 26,000 people before the pandemic,” the left-wing outlet reported.

Documents reviewed by the Post suggest the retailer had collected upwards of $95 million across its dozens of locations, with individual stores each pulling in a piece of the pie.

Ever since the story broke, backlash against the retailer has been brewing nonstop on social media (*Language warning):

“AutoNation used separate tax identification numbers assigned to dozens of its more than 300 locations to apply for at least $266 million in funds for separate dealerships, including Jaguar and Land Rover of Bethesda, Porsche Orlando and Lexus of Cerritos, outside Los Angeles,” the Post’s report continued.

And AutoNation seemingly submitted these applications with the blessing of its executives, including James J. Murphy, the company’s vice president of finance.

“The majority of our dealerships are able to apply for this,” Murphy allegedly said during a conference call with employees last week, his suggestion apparently being that they should go out and file their own applications.

Questioned about the Post’s findings, AutoNation executive vice president Marc Cannon said the retailer had sought the bailout so it could rehire furloughed employees.

“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,” he said. “From the beginning, AutoNation decided that all PPP funds would be used only for our employees and nothing else.”

He further claimed that the board had already voted Thursday to return all the bailout funds the company had collected.

It appears this claim has helped AutoNation regain a smidgen of its lost trust:

It’s not really clear though that the retailer actually did anything wrong. The rules drafted by Congress weren’t violated. Moreover, by returning the bailout, the retailer may therefore not have the money needed to rehire its furloughed employees.

AutoNation reportedly had 26,000 employees prior to the start of the pandemic. It’s unclear how many still remain amid the coronavirus crisis.

Of those employees still on the job, the Post found several who found their employer’s behavior to be “shameless.”

“None of us at the store level had any idea that we were applying for this money. That was all done at the corporate level,” one said.

“That’s left these mom-and-pop retailers, restaurants, barbershops, day-care centers, so that they can’t get money because the swift attorneys at companies of our size can swoop in and get this money and they can’t. I just find it appalling. I don’t think that was the intent of the money.”

The intent of the Paycheck Protection Program “is to keep workers employed during the pandemic,” according to Forbes.

“Small businesses don’t have investors or millions in cash and credit to weather this storm. AutoNation could have made it through without taking these loans out,” another added.

AutoNation reportedly earned $450.60 million in net income last year.

Friday’s bombshell reporting from the Post came almost exactly a week after the Paycheck Protection Program initially ran out of money, spurring Trump administration officials to ask Congress to approve more funding:

After suffering from days of obstruction from Democrats, Congress finally approved an additional $310 billion PPP funds this week. It’s unclear though whether the approval came with any fine-tuning of the program’s allegedly overly lax eligibility rules.

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Vivek Saxena

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