Will U.S. Car Buyers Order…and Wait?

It’s the American way to buy vehicles.

Unlike their European counterparts who go to inventory-thin dealerships to order vehicles and then wait for automakers to build them, U.S. consumers tend to shop for what’s available, whether online or in person.

Once they land on a vehicle, they want it now. No Euro-like waiting for order fulfillment.

But a chronic shortage of microchips has forced automakers to cut production. That’s thinned out dealer lots (which arguably were often overstocked before), making on-the-spot purchases more challenging.

The situation has led a growing number of U.S. auto shoppers to order (and wait) for a vehicle of choice.   

“About 10% to 20% of our customers were of that camp and willing to go through the ordering process,” says Lauren Waldrop, general sales manager of Audi Princeton (NJ) (Pictured, below left).

0305Waldrop_0.jpg

“We’re seeing those percentages increasing, particularly among customers who want to get exactly what they want,” she tells Wards. “Manufacturers are saying they want American car buyers to think more like Europeans.”

Waldrop acknowledges that getting a nation of car consumers to pivot from seeking immediate gratification to showing a newfound patience by ordering a vehicle and then waiting for an automaker to build it “is a long-term vision.”

Still, her dealership is an early user of a new software product, J.D. Power Online Ordering.

“This is a breakthrough product for an industry that is still grappling with inventory shortages caused by persistent supply chain issues,” says Phillip Battista, J.D. Power’s head of dealership technologies and modern retailing.

The new product comes at a time when 16% of new-vehicle buyers have gravitated to ordering online, according to the J.D. Power research. The company calls those consumers “digital mavericks.”

J.D. Power says its ordering software functionality includes:

The product is the first in the company’s just-launched Modern Retailing as a Service. Battista says it aims to help the automotive industry adapt to rapidly changing consumer preferences and vehicle-shopping behavior.

J.D. Power says the new system uses advanced software, data and predictive analytics to enable the automotive industry to customize and scale offerings based on specifically defined needs.

With the vehicle-ordering component, the dealer, not the customer, submits the build order to the manufacturer.

“We’re still involved that way, although the consumer uses website tools for things such as vehicle selection, financing and trade-ins,” Waldrop says. “That information migrates to the ordering software the dealer uses.”

Audi Princeton has used the system since December. “We’re getting about 50 people a month who order vehicles now, she says, noting that is relatively a lot. “Before, we’d struggle to get that many.”

Customers ordering precisely configured vehicles tend to skew toward luxury brands, such as Audi. Many shoppers of those brands are particular about not getting just any car that might be in stock.   

“They usually have other vehicles in the household, and they know exactly what they want,” Waldrop says. “They feel it is their work of art. Will everybody order vehicles? No. But the numbers are growing.”

She says it takes four to six months from order to delivery of an Audi at her dealership.

She adds it took about three to four months before the inventory shortage situation, which has reduced sales but increased dealer and automaker profit-per-vehicle.   

Build-to-order has been around for years in the U.S. but has seldom been used until recently. The industry joke was that it’s a concept of the future – and always will be.

Yet it is starting to catch on because of the inventory shortages and because state-of-the-art software makes the order-build-deliver process more efficient.

But the hamstringing microchip shortage is gradually abating. Automakers plan to increase production this year. Dealers expect to beef up their inventories.

When that happens, will the blossoming build-to-order trend wilt?

“It’s hard to say,” Waldrop says. “Right now, customers who order cars are saying, ‘This isn’t so bad.’”

But in the U.S., ordering is an option. In Europe, it is all but mandatory because its dealerships stock many fewer vehicles on their premises.

So it is order…and wait.

Such postponements of immediate gratification, whether voluntary or not, draw a comment from Doug Betts, speaking at a recent auto conference in Dallas.

Of the Europeans, Betts, an American auto industry veteran who now heads J.D. Power’s automotive unit, says, “I don’t know why they are so patient.”