Complainer’s Corner: Dealers Now Whinging About Rail Logistics
After weathering pandemic-related shutdowns, chip shortages, and barren lots, some dealers are complaining our nation’s rail system is suddenly no longer up to the task of delivering new cars. A few are saying they have a point, whilst others muse it is a bit of karma for three years of price gouging and “additional dealer markups”.
Actually, that latter assertion is off the mark. If vehicles are having trouble finding their way to showrooms – no matter the reason – inflated prices will surely continue instead of abating. Still, we think it’d be tough to find many sympathetic to an industry populated by people who have brazenly lined their pockets on the backs of Americans for the last 36 months. There are good actors in the field, of course, but there are plenty of stories about obscene asking prices and dealer practices since we all learned the word ‘Covid’.
At the core of this latest hiccup is an apparent shortage of rail cars with which to transport freshly assembled machinery. A fantastically detailed report from the Detroit Free Press talks about the lack of rail cars, specifically the enclosed multilevel units which transport about a dozen machines at once. According to stats in the story, roughly three-quarters of new vehicles are moved via rail in a typical year. Absent an abundance of proper autoracks, it is suggested that roughly 70,000 new cars are sitting idle at or near their facility of manufacture.
Why is there a shortage? The article goes on to say part of the problem is due to new routing of vehicles, with some overseas manufacturers using different ports and sending their cars on longer rail journeys once they arrive in America. Same goes for rigs produced in Mexico; they need to be distributed somehow but places like Ramos Arizpe and Saltillo aren’t exactly next door to major U.S. markets. This ties up autoracks for extended periods. And, in a fact I learned today from the Freep, most autoracks are part of a pool that is shared by multiple railroad companies and administered by a third party. The more you know.
Back in Michigan, the financial partner of a dealer in Redford Township moaned to the Free Press that his store, Matick Chevrolet, only sold 165 new cars last month when they used to do “twice as many.” According to Matick’s website, the dealer has 54 vehicles on the ground and 143 in transit. And, if you’re wondering, the place lists no fewer than 17 people on its sales team, plus 9 more in sales management and 6 customer care reps dedicated to sales.
The rail issue is said to be affecting other industries such as food and grain shipments, though they obviously don’t use autoracks for transport. As for cars, it seems the hits keep on coming in order to maintain inflated transaction prices.
[Images: Bogdan Vacarciuc/Shutterstock.com]
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