Dealers Are Running Out of New and Used Vehicles
It'll most likely affect new and used car prices.
Car factories are finally starting to reopen after several weeks of idling due to the coronavirus pandemic, which not only caused tens of thousands of workers to stay at home, but also depleted the inventory reserves of Detroit's Big Three. And while the situation is dire, sales haven't slowed down as much as analysts initially predicted thanks to ridiculously-good incentives—so now the industry is facing a new problem: dealerships are running out of inventory, and production isn't quite up to speed yet.
The temporary closure of nearly all production facilities is causing a major shortage of new vehicle inventories across the country as the general public starts to venture out for the first time in months. And according to the Detroit Free Press, dealerships could legit run out of cars soon.
"I have back orders on everything. All four of our Ford dealerships have a total of 14 Rangers when we normally would have 100,” Sam Pack from Pack Auto Group in the Dallas-Fort Worth area told the Detroit Free Press, adding that his Chevrolet dealership is even worse off.
Likewise, Wes Lutz from Extreme Chrysler Dodge Jeep Ram in Jackson, Michigan thinks that his dealership "will run out of Silverado pickup trucks by June," and noted that there is a good chance his Ford dealership will run out of F-150s.
Automakers are pushing to recover from the shutdown by adding extra production shifts to ramp up as quickly as possible, but the efforts haven’t been without problems. In late May, Ford was forced to shut down its newly reopened Dearborn Truck Plant after a worker tested positive for COVID-19. Others have had problems getting parts from suppliers in Mexico and elsewhere. Analysts expect inventory levels to catch up to demand, but it won’t happen overnight.
“Lack of inventory won’t be a long-term problem provided Mexico gets online, but it will delay some sales for May-July perhaps into later months of 2020,” David Whiston from Morningstar Research Services also told the Detroit Free Press.
What can you do if you’re in the market for a new vehicle? Dealers and analysts agree that waiting is not the best strategy.
“Don’t wait another 30 days because we won’t have any new product in 30 days,” added Lutz. In addition, the Michigan dealer doesn’t feel any better about the used car market, either, saying that they're acquiring new inventory at virtual auctions "but it’s hard to buy cars without touching and seeing them.”
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