We’re Working Out Of New Vehicles

We’ve been advised for the final two years that, “it should worsen earlier than it will get higher”, however at what level do you elevate the white flag and acknowledge that we’re dealing with an automotive disaster by no means seen earlier than? The availability chain woes and chip shortages have made headlines for properly over 18 months, and whereas supplier inventories have been extraordinarily low, the market has continued to maneuver alongside, leaping over one hurdle after one other, however as we head into the summer season of 2022, producers, sellers, and shoppers are dealing with challenges that can inevitably disrupt gross sales and automobile availability for the foreseeable future.

How unhealthy are the shortages? Nicely, right here’s the scenario for Honda.

To begin the month of April, Honda had 18,000 models on the bottom in the USA for patrons to purchase, which this alone is nowhere shut to fulfill demand, nevertheless it’s gotten worse in Could with solely 12,200 new autos on stock. Mike Kistemaker, Honda’s assistant vp of gross sales mentioned.

“Which implies there have been solely 11 Hondas on the bottom on the common retailer and a three-day provide.”

Available in the market for a CR-V or Civic? Good luck.

“Completed with a one-day provide and switch charges properly over 90 {59f294ee53471ce291eee9b2f895508f02efe5cbe8006f5943ec3f23e33805c3},” Kistemaker mentioned. “I’ve by no means seen a one-day provide of our product.”

A one-day provide implies that sellers solely have sufficient CR-V’s and Civics to final a day; basically making it unimaginable to search out both automobile on the brand new market, and if you happen to do find one, you’ll be pressured to buy the minute you stroll into the showroom. To place all of this into perspective, ideally you need a 30 day provide, and a few manufacturers earlier than 2020 had sufficient stock to final near 2 months. Producers up up to now had been hovering round 10-15 days, which isn’t the most effective situation, however at the least you’d have automobiles to select from.

Honda isn’t the one producer coping with provide points. Kia, whose managed to one way or the other have automobiles on the bottom are starting to really feel the consequences.

“We proceed to have challenges with manufacturing and distribution of our autos,” mentioned Eric Watson, head of U.S. gross sales for Kia. “Our supplier inventories proceed to be at historic lows, someplace between seven and 9 days’ provide of autos on the bottom.”

Toyota can be in the identical boat, as they solely have 13,800 autos distributed amongst it’s 1,500 Toyota and Lexus dealership places.

Even when the availability chain points and chip shortages have been resolved in a single day, the consequences of the final 18 months are going to be felt for fairly someday, as used automotive costs will keep their excessive resale values, and for the subsequent few years these shortages will then create an absence of provide on the used market, as we’re now in a automobile deficit properly into the thousands and thousands, as factories aren’t producing sufficient automobiles to fulfill the demand at this time or into the close to future.

To say we’re in uncharted waters could be an understatement, and in the intervening time aid isn’t going to be on it’s approach for some manufacturers till the 4th quarter of this yr on the earliest.