Nate Campbell is general manager of Park Rapids Ford. He said last Friday they only had six new vehicles in the lot.
“It seems that as soon as we get something it’s selling right away,” he said. “It’s supply-and-demand metrics.”
Much of their business is repeat business. “If you order a vehicle you’ll see that a lot sooner than one sitting on the lot,” he said. “It’s been pretty tough to get any inventory for the lot.”
Marc Thielen is general manager at Thielen motors.
“Our inventory is less than what we usually carry by quite a bit,” he said. “If you drive around the country, you’ll see the same thing there with fewer cars in the lot. Despite a lack of new vehicle inventory, sales are up compared to last year.”
Thielen said shipping issues were a problem earlier in the pandemic but seem to be improving and they’ve had good availability of mechanical parts.
He explained the main reason dealers are getting fewer new vehicles because of a semiconductor shortage.
“Semiconductors are manufactured all over the world,” he said. “Vehicles are waiting at the plant with missing parts. At a later date, when they get more parts, they’ll install the parts and ship it to us.”
Several factors led to the semiconductor shortage.. “My take on it from what I read is when they had all these quarantines, people went home,” he said. “The car manufacturing plants shut down for three months during COVID-19, so they didn’t need semiconductors and stopped buying them. The companies kept selling the semiconductors for use in other electronics. That’s why we’re in a shortage right now.
He explained that today’s cars have many more electronic components than cars of 10 or 15 years ago.
Solutions to the shortages
“Ford Motor Company has been working hard on solving that problem,” Campbell said. “They’re starting to produce their own computer chips and things are starting to turn around. In a video June 17, the vice president of the Ford Motor Company said by mid-August they would be back to full production.”
However, it will still take time for those vehicles to make it to dealer lots.
“There will be a delay there,” he said. “There’s also some talk about shipping cars without computer chips to dealers and having dealers install them once they become available, but that hasn’t been decided at this point.”
Still, he said there has never been a better time to order a new car. “The value of a new car hasn’t changed. If you’re able to catch the tail end of this high market, you get more for your used vehicle. Autonews.com has more in-depth information about these automobile manufacturing issues.”
Thielen said manufacturer rebates on new cars have decreased since the pandemic, and buyers who want a specific vehicle may have a longer wait.
“Every car lot you go to has less inventory, but I try to keep the attitude positive,” he said.
In the past, people would show up at a car dealership and walk around to look at all the vehicles available. These days there aren’t many new vehicles in the lot to look at.
“The car lots don’t fill up because we have sold a lot of the vehicles before they get here,” he said. “I might have four or five new cars on display, but many of the vehicles coming in from the factories go straight to the customer who reserved it without even hitting the lot.”
Thielen said the demand for the few rental cars they have is also high and they need to be reserved well in advance. “We haven’t changed the rental rates like some places have,” he said.
A good time to sell
Because there are fewer new vehicles and fewer trade-ins, used cars are also in high demand. Park Rapids Ford has 46 used vehicles in stock, which is about normal for the dealership. That means sellers are getting top dollar.
“We’ve gotten creative in how we’ve purchased inventory,” Campbell said. “A lot of it came from customers who had additional vehicles or could go without one until their new ones arrived. People are realizing used car prices are high now, so they bring them into the dealership and get their money right now rather than trying to sell it themselves.
"Once they’re on the lot, they are gone in two weeks on average,” he said.
Thielen said used vehicles are in high demand everywhere. “We’ve purchased a lot of cars in the last three months from people who had extras they didn’t need,” he said. “I’ve heard that the inflation in the used car market makes up a one-third chunk of the inflation in the country as a whole."