Desperate dealers see vehicles trickling in

Industry

The pickups that dealers have been clamoring for are at last arriving on their lots — at least in small numbers. But the dealers’ sigh of relief is followed by a jolt of fear: How will such small shipments get them through the rest of the summer?

Bert Ogden Auto Group typically carries about three months’ worth of inventory, which helped it boost sales in May and June while many stores had scarce inventory and lost sales. Last week, the 18-store dealership group in Texas was down to about one month of inventory.

“July worries me,” said Jorge Gutierrez, corporate strategist for Bert Ogden. “July will be an atypical month because of the inventory pinch we’re in.”

Nationwide plant shutdowns from mid-March to mid-May wiped out many dealers’ inventories. Rebounding de- mand, combined with that loss of production, has reduced inventory levels to the lowest the industry has seen in nearly nine years, according to Cox Automotive. Six weeks after most plants reopened, dealers remain desperate for top-selling vehicles, especially pickups. Many of the pickup shipments that began arriving at dealerships late last month are preorders, and the rest sell right off the truck, dealers say.

“Inventory increased slightly in the third week of June but remains down from pre-pandemic and last-year levels,” said Cox’s chief economist, Jonathan Smoke. “We believe that at least June and July new-vehicle sales will be hampered by this lower supply. And with lower supply, the market will also see lighter incentives.”

Automakers are trying to accelerate production and deliveries while also abiding by new health and safety protocols.

At General Motors, most upcoming output will restock dealerships as deliveries to car-rental companies decline. GM also said it’s working with logistics and trucking companies to ensure vehicles are shipping as soon as they’re built.

“The manufacturers are doing everything they can,” said Casey Best, general manager at Capital Chevrolet in Wake Forest, N.C. “They want us to have the inventory as bad as we want it, because they’re not making anything if they’re not shipping inventory to us.”

Inder Dosanjh, dealer principal at Dosanjh Family Auto Group, expects to sell pickups as soon as they arrive for the next three months at his 17 dealerships in the San Francisco Bay area. His stores have less than a 10-day supply, “which is not bad because now they are coming in,” he said. “We get 10 off the truck, we sell 10 the next day.”

In June, Dosanjh’s stores sold nearly every vehicle in stock. Sales were down 10 to 20 percent per store but only because of inventory constraints, he said. Last week, his inventory levels were 75 percent below normal levels.

Gutierrez started seeing the days’ supply at Bert Ogden drop in mid-June.

“Even with a production halt, our rate of sales has continued to be the same, so now we’re in this inventory pinch,” he said.

The group has few of the high-demand vehicles customers are looking for, so it shifted its focus to advertising the vehicles in stock and converting customers from a Chevrolet Silverado 1500, for example, to an SUV or a Silverado 2500.

The stores have started getting light-duty pickup shipments, but “those are either pre-sold or they’re not lasting. We’ll get five at a store and they literally all either sell the same day or in a day or two,” Gutierrez said.

Capital Chevrolet was only about 15 shy of its 300-vehicle sales target in June. It would have hit the goal if it had another 25 to 30 vehicles in stock, Best said. The store is down to about 400 new vehicles on the lot, half its usual inventory.

The store sold its last “bread and butter” vehicle last week, the Chevy Silverado four-wheel-drive crew cab LT.

Inventory is “a huge concern for July and August,” Best said. “It’s harder and harder to transfer from other dealers,” Best said. “Everyone is in the same boat we are.”

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