Dealers Struggle to Stock In-Demand Models
Inventories have not recovered from the chip shortage and new challenges emerge as the UAW strike continues, reports CDK Global.
The ongoing UAW strike has resulted in an inventory crunch for the Detroit Three automakers, made worse by a vehicle shortage before the September work stoppage.
New research from CDK Global, a leading automotive retail software provider, shows that the number of consumers who found cars they eventually purchased dropped from 51% in August to 47% in September.
“What we learned is that nothing has hit normal yet,” since the microchip shortage was resolved, David Thomas, automotive industry analyst at CDK, tells Wards. “What we saw (in September) is that people are having a hard time finding a car they want in stock. That was consumers’ number one pain point.”
Cox Automotive recently reported a 60-day inventory supply across the landscape. The disconnect between the two reports’ numbers may be the result of several factors, including what Thomas calls a “rollercoaster” of supply across all automakers, particularly the Detroit Three.
One example is General Motors, which Cox reports went into October with a 60-day vehicle supply. As Wards reported, though, the automaker faces lower availability of some popular Chevrolet and Cadillac models. Buyers’ competition for such models can be fierce, depleting dealers’ supplies.
Such shortages result in a lack of in-demand vehicles available for test drives and, of course, a lack of vehicles dealers can sell.
The CDK study found that shortages led to about 43% of consumers buying cars in transit to the dealership (24% in September vs. 21% in August) or directly from the factory (19% in September vs. 16% in August).
The good news for the Detroit Three, at least for now, is that franchise dealers representing foreign automakers have even tighter inventory supplies because of many factors including supply shortages and transportation bottlenecks.
“It’s a tight market for shoppers to find what they want,” Thomas says. “But it is an always moving market. It won’t remain the same month to month.”
Here are other insights from the CDK analysis:
About 43% of consumers visited at least two dealerships during their vehicle purchasing process, and 47% consulted with an expert for guidance before finalizing their decision.
In contrast, 30% of consumers visited just one dealership, with 34% opting to select personally their vehicles and negotiate the most favorable price, including the trade-in value.
A minimal average of less than 2% of respondents completed the entire car purchasing process online, with the figure never going beyond 3%.
The trend of ordering cars directly from the factory has declined, with the numbers falling from 28% in June 2022 to around 18% in the recent months of 2023, making the average close to 21%.
The fluctuating interest rates have influenced vehicle financing trends, seeing the ease of credit application reach a record low of 57% in January 2023, later bouncing back to an annual average of about 62% by June 2023.
About the Author
You May Also Like
