Dealers Are Freaking Out Over New Car Inventory Shortage

Auto factories can’t turn out new cars (and trucks, especially) fast enough these days.

byPatrick George| PUBLISHED Jul 20, 2020 9:53 AM
Dealers Are Freaking Out Over New Car Inventory Shortage

Good morning and welcome back to Speed Lines, The Drive's roundup of what matters in the world of cars and transportation. It is, unfortunately, Monday again. I can't do anything about that, but I can bring you the news: inventory fears in states hit hard by coronavirus, skepticism over Tesla's latest autonomy claims (imagine that!) and what the new 2021 Ford Bronco really aims to do.

Inventory Is Beyond Tight

It's been a long and fraught year in the world of car-selling, and we're barely even halfway through it. Though new car sales have been largely terrible as the coronavirus and skyrocketing unemployment have kept many buyers home, some shoppers are still after big deals and many others are switching to cars over concerns about public transit. Truck sales in particular have been one of the only bright spots for dealers and automakers in 2020.

But the problem is inventory. As we've discussed many times on Speed Lines this year, plants aren't at full capacity yet and some may even shut down over coronavirus fears or local lockdowns. That's bad news for dealers, buyers and the car companies alike. Now, especially in states that didn't lock down earlier but are seeing virus surges of their own, inventory is becoming a big problem, reports The Detroit News:

W. Carroll Smith, president of Monument Chevrolet in Pasadena, Texas, which is near Houston, said he hasn't seen a big drop-off in business at his dealership as coronavirus cases in the state have spiked over the past two weeks. The problem is, a lot of those people are buying used because there isn't enough new product on the lot. Simply put, Texas is truck country, and Smith needs more pickups.

"Normally 90% of my sales are trucks," he said. "The challenge, especially for us as a GM dealer, is we had the plant shutdowns coming off the strike. It's hard to know what volumes would be if we had more inventory."

Michelle Krebs, a senior analyst for Autotrader, said her organization is not seeing a significant sales downturn in hot spots like Texas and Florida based on their internal data.

[...] Krebs said the biggest threat to new-vehicle sales is lack of inventory, which she said is the lowest in almost nine years. July sales likely will be limited by low supply.

"Supply is particularly low in pickup trucks, both full-size and midsize. Texas is the biggest consumer of trucks, so sales there could be hampered for that reason," she said. 

That story says GM is having the biggest headaches, between the United Auto Workers union strike last year and plant shutdowns in the spring and early summer. And in Texas—the country's second-biggest car market—residents are awaiting the possibility of another lockdown as cases increase. That's a concern, considering that market had been pretty steady until fairly recently. People are even buying used due to lack of inventory. 

This will be a trend to watch throughout the rest of the summer. 

Yes, The Bronco Exists To Kill The Wrangler

The new Bronco isn't just a Wrangler competitor—it's deliberately created to steal sales away from this strong-selling, lucrative, iconic vehicle that until now hasn't really had many direct rivals. (There's the Toyota 4Runner, maybe, but it's not really apples-to-apples.) 

That's the hope of dealers like Scott Tarwacki in Michigan, anyway. He told as much to Automotive News

"There's a loyal, lifetime Wrangler enthusiast that we might not be able to pull away," he told Automotive News. "However, I think there are a lot of people who looked at it as the only option they had, and we should really be able to capitalize with them."

Ford Motor Co. views the Bronco as a key piece of its long-brewing turnaround under CEO Jim Hackett. Designers spent five years — a stretch in which Jeep sold more than a million Wranglers in the U.S. — developing an SUV that would both pay homage to its rich heritage and show off the latest technologies.

Many features were added to one-up Jeep, such as the 35-inch tires included in the Bronco's Sasquatch package that are 2 inches bigger than the largest available on the Wrangler. Unlike the Wrangler, the Bronco's removable doors can be stored in the back, and the open-air roof isn't bisected by a cross bar.

Even Ford COO Jim Farley has boasted that the Bronco is meant to be a "much superior product" to the Wrangler, the story says. So make no mistake what the Bronco is about: stealing business from one of Fiat Chrysler's most lucrative products. 

Level 5? Probably Not Yet, Experts Say 

Tesla's Q2 earnings call is Wednesday afternoon, and I'm sure CEO Elon Musk will have something to say about the company's surging stock price. He may also drop more information about his recent and very bold claim that Tesla is close to achieving Level 5 autonomy—self-driving that does not require human intervention—later this year. 

But as you might guess, the experts call shenanigans, reports Automotive News:

"None of this is on a plane of reality," said Jason Levine, executive director of the Center for Auto Safety, a nonprofit automotive safety watchdog. "It's an absurd idea at this point in time with the technology available and infrastructure available and complete unwillingness of Tesla to acknowledge its mistakes."

[...] Sam Abuelsamid, principal analyst at Guidehouse Insights and author of the report, says Tesla is not reaching Level 5 any time soon, nor doing so with existing vehicles on the road, as Musk touted.

"The cars they are building will never be Level 5, period," he said. "It's nonsense. He needs to shut up until he can deliver something."

Exactly what Musk means by completing and achieving Level 5 remains nebulous, in the sense he didn't offer a specific timeline for enabling such operations in cars. Asked about Musk's comments in general and a time frame for Level 5 deployment, a Tesla spokesperson did not respond to a request for comment or further details on plans.

One prominent Duke University scientist even said she thinks Musk "doesn't really understand what Level 5 is." I suppose we'll see this week, but the entire autonomy industry seems united in saying that Musk's claims aren't remotely viable yet. 

On Our Radar

Read These To Seem Smart And Interesting

Your Turn

Are you buying a new car this summer? Have you encountered inventory issues yet?