At the nation’s franchised ultraluxury and exotic dealerships, new vehicles usually are the stars of the showroom. But with the new-vehicle production pipeline squeezed by COVID-19, 2020 has been anything but ordinary for elite brands.
Inventories are tight, used models are commanding higher prices and service has taken on even greater importance.
“Inventory levels are at a 12-to-15-day supply, where we like them to be at 45-to-60-day, so we’re woefully out of stock,” Robert DiStanislao, president of RDS Automotive Group, said of the brands he sells.
His used-vehicle inventories also are lower than he’d like.
“We’re seeing that the used-car market is stronger than it’s ever been,” said DiStanislao, whose group has stores in Pennsylvania, Connecticut and California that sell Bugatti, Koenigsegg, Lamborghini, Maserati, McLaren and Porsche vehicles.
Although sales are expected to be down this year, there are signs that things are trending toward normal. Factories in Europe have begun ramping back up, and critical product introductions, redesigns and freshenings will arrive as the year winds down.
In-person events, albeit socially distanced, have sprouted back onto the calendar for some stores, allowing for the crucial interaction between client and dealer, whether on the showroom floor or elsewhere.
“Our cars are a car where people will go to the retailer, they’ll engage with the retailer and they’ll buy a car,” McLaren CEO Mike Flewitt said in an interview last month. “It’s not so much a commodity that can move to be a purely digital transaction. There aren’t many people who would buy a McLaren just over the Internet. They actually want to know the people they’re buying the car from.”
Heath Strayhan recalls the early days of the crisis.
“Things stopped right in the middle of March for us and our activity almost ceased for the rest of that month,” said Strayhan, general manager at the Avondale Premier Collection in Dallas, which sells Aston Martin, Bentley, Koenigsegg, Maserati, McLaren and Rolls-Royce vehicles.
“We do not see our transactions as being single transactions,” he said. “We see them as being long-term, multiple transactional relationship-style partnerships. Going into March, we benefited from that. We had a very high level of pre-sold units that were due to hit in April. That has continued through this time period.”
Still, the gravity of the unfolding COVID-19 crisis gave Strayhan pause on April 1.
“I said something that I would never say to myself on the first of a month which is: I wonder how many of these pre-sold units I’m actually going to sell?” he recalled.
By April’s end, each of the pre-sold new vehicles had been delivered. Strayhan declined to specify how many, but noted it was in the double digits, making it a robust month for the store, he said.
On the used end, Strayhan said the price of some pre-owned vehicles has shot up.
“With the ’16 to ’19 model pre-owned cars, we’ve seen values increase dramatically, upwards of 20 to 25 percent, in certain segments, as a function of the supply of new cars,” he said.
Brett David, CEO of Prestige Imports in North Miami Beach, Fla., which sells new Lamborghini, Lotus, Pagani and Karma models, said dealers initially took different approaches when it came to used vehicles.
“Nobody knew how serious or significant this pandemic was going to be,” David said. “You had dealers at the time calling each other concerned, scared, not knowing what was actually going to happen. We had dealers discussing with one another what we should do with our pre-owned cars. Should we wholesale them out just to take the blunt risk and take all the depreciation of these cars early on, so we don’t get hit if this was to get a lot worse? Some dealers did that. With us, our consensus was just to stay tight.”
David said he and his team realized that with production of new vehicles being halted, the used-vehicle market would provide an avenue for growth. It became a focus point. “We have sold out of most of our old-aged inventory, we’ve sold out of all of our newer, hotter product,” he said.
“We’re seeing buyers come from all across the country.”
Prestige Imports sells about 10 to 15 new and around 40 to 50 used vehicles per month, David said. In August, he opened a new Lamborghini showroom, roughly three times the size of the previous one.
Fixed operations has also been a positive area of business in light of tight inventories.
“Our fixed operations has been very robust,” said Strayhan. “It’s been a great business for us. It’s been a great backbone. It’s caused me to even have more optimism because people are servicing their cars.”
For DiStanislao, service has been crucial.
“While our [new] units will be down, our overall profitability will be up because there are people that have used cars and are keeping them and servicing them,” he said.
In the past, dealerships might have hosted large gatherings at the showroom or a racetrack, but social distancing has altered that.
Strayhan said Avondale only recently began hosting events again, on a smaller scale, tied to new-model launches.
“We had a three-day Rolls-Royce Ghost launch where our vendors came in, Rolls-Royce brought their experts in and we had individual appointments,” he said. “We invited our clientele to come in and have an individual presentation of the new Ghost, which was 100 percent at capacity.”
For the Ghost event, Avondale had the redesigned sedan for twice as long as it normally would have, he said, which allowed the dealership to maximize the number of individual showings.
Avondale also hosted customer launch events for the Aston Martin DBX SUV and McLaren Elva hypercar in the brand’s showrooms, complete with social distancing and masks.
In October, DiStanislao said his group will be hosting a drive-in movie screening of The Italian Job for Philadelphia-area customers to make up for the cancellation of track days and road rallies.
“Our customers are very happy to stay engaged that way in a safe environment,” he said. “The cars are going to be spaced, everyone’s going to be in their own car and we’re going to deliver food to their window.
“Even though it’s not particularly a warm and personal exchange as maybe a track day or a rally might be, they love the idea of doing anything with their car. This, we found, was a great alternative to stay in touch with our customers and keep them enthused.”