By on August 17, 2020

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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11 Comments on “Dealer Inventories Could Take a While to Stabilize...”


  • avatar
    MatadorX

    This is spilling into the used car market in a huge way. Prices are up 30-50% across the board, with desirable vehicles selling before you can even fire off that “is this still available” email. In turn, pricey 200k mile 15 year old junks have pushed people back towards the new side. I’d rather pay MSRP for a new Tacoma than 20k for a 2006 example with 200k miles. Not to mention every Gen X seems to be enthralled with the word “rare” when describing anything with 3 pedals, with a price to match. If it still comes in stick, buy it new.

    I work in new car distribution. Since production resumed volumes have been very very poor. If you think a car is hard to find now, just wait a couple months. The only product shipping in significant volume is high end German. Product from Mexico has hit an all time low, same with domestics although not quite as bad.

    • 0 avatar
      ajla

      Yea, inventories are extremely depressed right now. The Buick/GMC dealer I went to last week (virtually the first time I did something other than a grocery store since April) was very sparse. It had a handful of Encore/Envision/Encore GX in stock then maybe 4(!) Sierras and 1 version of every other GMC model. They were in the worst shape but other brands had a lot of lot gaps as well.

      Like you said, not a great situation for buyers. Hard to find what you want, higher used car prices, and generally less incentive for the dealer to negotiate.

    • 0 avatar
      hreardon

      Interesting you mention the used market: various car forums are filled with threads discussing the offers being made by the online used car buying services like Vroom and Carvana. The valuations are increasing by the week. It’s nuts.

      Out of curiosity I put my parents’ 11 year old Subaru Outback Limited 3.0 with 75,000 on the odometer into Carvana: $6,900. Vroom offered $7,450.

      Nuts.

  • avatar
    hreardon

    Not a shock. This shock to the industry was on both the supply and the demand side of the ledger. People looking for deals got them at the very beginning of the pandemic as dealers looked to unload inventory, fearing the worst. Those looking for deals now are stuck with few choices, and fewer incentives/discounts.

    I read an industry insider report over the weekend suggesting that equilibrium may not be found until this time next year, assuming no other major shocks to the system and COVID fears subside.

    In speaking with people in the BMW world, there’s a significant shortage of some key models that BMW does not anticipate catching up on until next spring.

  • avatar
    MatadorX

    That said, our facility processes Tacoma’s. 3/4 of the entire storage is full with ever changing inventory, replenished as soon as its shipped. Toyota has 3 plants making these things and should be able to get the demand back filled quickly. The issue is greedy private sellers (most reputable used dealers are still pricing based on market data and sell used inventory almost instantly). The cash buyer like me is going to look at dented, peeling paint, worn out trucks for 20K+, and basically saying screw this, and buying new. There is a surplus of used cars available right now with less people commuting. It’s up to MSRP of new models available in sufficient quantities to bring down the price of the used market to normal levels.

  • avatar
    SCE to AUX

    Only in the last month have I begun to notice very thin new car inventories. I regularly drive past Toyota, Mazda, Subaru, Hyundai, Kia, Dodge/RAM, Jeep, Ford/Lincoln, and Chevy.

    All look pretty bleak, especially the Subaru and Toyota lots.

    But the mfrs should be careful: If the joblessness persists too long, there could be an economic impact that affects even those who are still working. 10% unemployment will eventually undermine everyone’s fortunes.

  • avatar

    That picture above reminds me the close-up picture of BW LCD screen with occasional blue or red pixels – probably production defects.

  • avatar

    The FCA dealer I pass every day is instructive. They are usually sales bank victims…cars stacked like cordwood. The parking lot is a bit of a valley, and when they are really full, cars are parked along the hill.

    Today, there are a few work trucks in the back, in the middle a smattering of black and grey Cherokees. No Chargers, none of the other cars. The pickups have been sold, save a very few full lux versions and a very few stripper versions. All in all, about 20% of the usual stock and the least cars I’ve ever seen.

  • avatar
    dusterdude

    Not sure if used care price increase is more of a U.S. thing ? I’m in the Greater Toronto area and just did a quick check on Autotrader and don’t notice a big difference….As for new vehicle inventories, I am sure they are tighter up here also but can’t quantify since I’m not in the market for a new car right now..

  • avatar
    Ryannosaurus

    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

  • avatar
    Jeff S

    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.

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