Featured Interview:
Auto retail expert Dale Pollak examines a new approach to inventory management
Retail prices have soared as industries across the country fight supply-chain woes, and retail automotive is no different. According to recent Cox Automotive findings, the rapid rate of vehicle appreciation has started to slow down, with analysts expecting some wholesale value depreciation to return. With the used vehicle market in such a transitional state, Dale Pollak, founder of vAuto and executive vice president at Cox Automotive, shares with us why this is a critical moment for car dealers. Read more
Top Headlines:
President Joe Biden is set to visit Ford’s new electric vehicle center this week prior to the debut of the electric F-150 Lightning Truck. The F-150 has been the top-selling truck since President Ronald Reagan held office and it brought in $42 billion from almost 900,000 sales in 2019 alone. Executive Chairman Bill Ford said the visit will show Biden’s commitment to the electrification of the auto industry. Ford plans on having the Lightning available at dealerships in the Spring of 2022 and it will compete with other trucks including Rivian’s R1T and Tesla’s Cybertruck.
Cyberattack victim Colonial Pipeline resumed operations last week after nationwide gas prices increased an average of 2.3%, but don’t expect fuel costs to fall soon. Prices started to increase even prior to the pipeline’s shortage due to growing demand as 77% of consumers are planning to travel post-vaccination. Experts predict higher enthusiasm for driving and growing crude prices will keep prices up throughout the Summer.
The shortage of new and used vehicles is continuing to impact consumers and those in retail automotive, including rental companies which are now acting as buyers and not sellers. Companies such as Enterprise and Avis typically purchase vehicles from automakers at a discount, but the shortage of available vehicles has created the need to purchase used vehicles both at auction and even directly from consumers, with no requirement they purchase anything in return. Cox Automotive Vice President Dale Pollak has predicted the lack of late-model used cars will continue for several years.
Tesla enjoyed a 52% uptick in deliveries in Q1 compared to Q1 last year, registering over 71,000 vehicles throughout the quarter. Experian reported that there were more than 99,000 electric vehicles registered nationwide, which is a 66% increase from a year ago. Tesla’s Model Y and Model 3 were the top registered EVs, followed by the Chevy Bolt. Experts say that despite the recent positive sales for automakers, supplier and shipping issues combined with the lingering effects of COVID-19 shutdowns will continue to impact luxury brands. Overall, BMW, Lexus, and Mercedes-Benz also saw more sales in Q1 and remained in the top three.
News & Opinion:
The cost of obsolescent parts for a car dealer
According to the NADA, an average-sized dealership is sitting on $50,000 worth of parts that haven’t moved in a year. Think of what could actually be done with that $50,000. If you were running things properly, that small investment could easily generate $400,000 in sales during a year. To help you get better control of your inventory, we’ve put together a few suggestions when you are ready to move those obsolescent parts out of the dealership. We start by looking at the policies and habits that cause this problem. Then, we move onto what you can do to resolve the situation now. Read More
Record car sales push days’ supply of inventory down further
New car inventory has been steadily decreasing since December on two main factors: extremely strong buying behaviors by an increasingly confident nation, and a struggle to keep up production volume due to the notorious chip shortage. At the end of May 2021, the days’ supply of new vehicles industry-wide drooped to just 44 days. That’s a 15-day difference from just a month previous and 75% below the end of April 2020. The Cox Automotive report puts total unsold new vehicle inventory in the US at 2.24 million units toward the end of April, roughly 420,000 vehicles fewer than at the end of March. It shows how dramatically the chip shortage has been affecting production while dealerships are riding the wave of ready-to-buy customers coming into their stores. Read more
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