Dealer Inventories Could Take a While to Stabilize

Matt Posky
by Matt Posky
dealer inventories could take a while to stabilize

Car dealerships around the nation are reportedly having trouble restocking inventories following the prolonged production shutdowns enacted in response to the pandemic. Despite supply chain issues subsiding a bit, Cox Automotive reported the industry only has a 62-day supply of vehicles. That’s approximately 2.3 million sparkly new units, and would be more than enough to keep consumers happy if people didn’t care which model they drove home. Demand may still be suppressed, but the selective nature of shoppers is not.

For example, you may be able to find a Nissan Rogue (the brand’s biggest seller) without much hassle. But finding one equipped how you wanted may be outside the realm of possibility in 2020, depending upon where you live and the fickle winds of fate. And you could apply that same logic to any number of brands, as most continue to note that some suppliers and assembly lines occasionally have to shut down to comply with health mandates.

Neither Ford nor General Motors have managed to return to pre-COVID levels of production, with the pickup segment being the hardest to manage. Dealers have also said Toyota’s Tacoma has suddenly become a rare beast, though the brand is struggling to meet demand in general.

Automotive News championed Southeast Toyota Distributors President Ed Sheehy, who said these production hangups are likely costing dealerships sales, as seeing this one coming. In March, he warned everyone not to turn down allocations because he feared the year would end with demand starting to normalize long before production could catch up.

From AN:

At Toyota Motor North America, “We have good days and not-so-good days,” said Randy Pflughaupt, group vice president of supply chain management. While each of Toyota’s plants is unique, “in certain instances, our plants or our supplier partners may have challenges due to attendance,” Pflughaupt explained. “If team members were potentially exposed to someone who tested positive for COVID-19, they’re required to self- quarantine for 14 days. Any attendance challenges could impact our production.”

At the same point in 2019, Toyota and its distributors and dealers had 458,123 vehicles in inventory, which at the time was a still-tight 55-day supply of Toyota and Lexus vehicles. At the beginning of this month, it had just 266,131 unsold vehicles available, a 42 percent drop.

A spokesman for Toyota Motor North America confirmed that all of its production plants are working overtime right now.

Under normal circumstances, August would be a little lean due to model-year changeovers. However, the pandemic stalled the launch of fresh product across the board. According to Cox, only 0.5 percent of current inventory are 2021 models, compared with 9 percent of inventory for 2020 models at the same point last year.

“Sales have been stronger than we anticipated, and the consumer has been amazingly resilient — at least those who have jobs and money,” Michelle Krebs, executive analyst at Autotrader, told Automotive News this week. “If you look at the price segmentation, you can see where people are hurting.”

Poorer folks have basically opted out of buying cars, with smaller automobiles (under $20,000) representing the largest inventory surplus. That segment recent developed a popularity problem of its own — in fact, we just discussed it. Meanwhile, midsizers costing a bit more, and which typically sell in larger volumes, have become difficult to stock. The same is true for some of the more affordable high-end models from luxury nameplates. Cox noted that Lexus was the premium brand with the lowest reserves, with just 35 days’ supply.

While not dire straights, it’s an uncomfortable position to be in — and it’s undoubtedly making dealers frustrated. We’re a bit annoyed ourselves, as the industry’s swap to quarterly sales reporting and near abandonment of inventory tallies has made the entire issue harder to analyze — presumably by design.

[Image: Avigator Fortuner/Shutterstock]

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  • Ryannosaurus Ryannosaurus on Aug 18, 2020

    Ordered 28 fleet trucks from Ford in January and they were in production when the Covid shutdown occurred. 6 trucks made it through and were delivered in April, the rest have been slowly trickling in as the plants fired back up. I am still waiting on the last 2 trucks and it's mid August! When I pick up the trucks at the local Ford dealer it's a sad sight. All they have left is one F-250 and it's a 90k Roush special edition. They have resorted to parking back of the lot fleet trucks (dump trucks and the like) out in front since they have no other inventory. Inventory manager told me that they can't get hardly anything in and that I was lucky because Ford is prioritizing existing orders

  • Jeff S Jeff S on Aug 19, 2020

    I am glad I am not in the market for a new or used vehicle now. I just bought a used 2008 Ford Ranger last June and a 2012 Buick Lacrosse last October at very low prices and both are very solid vehicles. I have noticed over the last few months that even the selection of used vehicles is down from what it was during the same time last year. Even when I was shopping for the Ranger there were lots of high mileage pickups with 200k miles or more in not so good condition at very high prices. I lucked out with the Ranger with the mileage at 101k no body rust but extremely dirty and needing a paint job and a new rear bumper and tailgate handle. I would have paid at least double for that Ranger if it didn't need those things but those were not that expensive to fix. Regular maintenance had been performed by the previous owner but because of the condition of the paint, rusted rear bumper, tires, and being extremely dirty the dealer took the truck to the auction and it was bought by a small independent car lot in Ohio who did not want to bother fix or detail the Ranger so I got a good deal. The front seat has no rips or visible wear and for 3k it was a good deal. Fleet white with auto and air it originally was a fleet vehicle. The Buick was more expensive but was in like new shape with only 45k miles bought from the original owner with complete maintenance records and garaged when not driven.

  • Analoggrotto Does it include a date with Mary Barra?
  • Tassos ask me if I care.
  • ToolGuy • Nice vehicle, reasonable price, good writeup. I like your ALL CAPS. 🙂"my mid-trim EX tester is saddled with dummy buttons for a function that’s not there"• If you press the Dummy button, does a narcissist show up spouting grandiose comments? Lol.
  • MaintenanceCosts These are everywhere around here. I'm not sure the extra power over a CR-V hybrid is worth the fragile interior materials and the Kia dealership experience.
  • MaintenanceCosts It's such a shame about the unusable ergonomics. I kind of like the looks of this Camaro and by all accounts it's the best-driving of the current generation of ponycars. A manual 2SS would be a really fun toy if only I could see out of it enough to drive safely.