The current state of new car sales: Is there still a lack of new automobile inventory?
Hello Loyal Beaverton Readers, thank you all once again for your phone calls and emails. We greatly appreciate all of your feedback but it seems that there is still more interest in the lack of chips available to the car industry. So, here we go with more about the semiconductor chip shortage that, in turn, not only limits the availability of new vehicles from all manufacturers, but also prevents some of the repairs necessary to keep our vehicles humming along in optimal condition.
The year of shortages
For most of the 2021 year, the semiconductor chip shortage, coupled with various other supply chain issues, has clearly and severely hindered automotive production.
While the demand has kept sales afloat early on, most if not all new vehicle dealerships are selling new inventory at the minimum MSRP. Starting next month, however, I am told that dealerships will be adding an additional markup (ADM). I also heard from a dealer group that they were adding a whopping $5,000 in dealer mark up to every new car.
How are dealerships staying in business?
Inventory levels have led to serious declines over the last few months and this leads me to ask two questions of my own:
- With the lack of inventory, how are dealerships keeping their doors open?
- Why should they discount the very few vehicles that they are allocated during this trying time?
Fortunately, dealerships have what is known as “Fixed Operations” which includes parts and service departments and provide a solid stream of guaranteed income. No matter what brand of vehicle we drive, servicing is necessary, as are repairs. Automobiles are machines, and they break. THE END.
How are domestic manufacturers doing?
Certain Manufacturers have had serious losses in the last 2 quarters. For example, one domestic manufacturer had a near 18% loss just for the month of September. These woes will continue as the microchip supply has not improved whatsoever and as a direct result, new vehicle inventory will indeed continue to hit all-time lows. In fact, in round figures, September of 2021 production was down an astonishing 47% over 2020.
On the bright side, Ford seems to be less impacted by these trends than most other automakers. Ford currently has 42 day’s supply in new inventory, which is far better than the industry average and their rivals including Hyundai (39 day’s supply), Volkswagen (31 days), Nissan (27 days), Mazda (27 days), Chevrolet (26 days), Honda (17 days), and Toyota (17 days), to name a few. Here are the straight facts about the automotive industry.
We hope this information has been helpful for all.
In the event any of our loyal readers are in need of a new, or pre-owned vehicle of any kind, please allow us to be of assistance. Also, if you have a vehicle that is not in use, and do not want to hassle with selling it yourself, please allow us the opportunity to purchase the vehicle from you, or sell it in consignment. We do provide pick up, as well as delivery service.
If you have comments or questions, please feel free to reach out to me: email@example.com or visit fergusonautobrokers.com