Low factory inventory means dealers need cars

Posted by

Shot of an empty automotive dealership showroom.

"Where are all the cars?" ask dealers. (Photo Credit: CC BY-SA/Bill Nicholls/geograph)

The economic climate of recession and the resulting taxpayer auto bailout apparently still has automakers gun shy, reports Automotive News. That’s because low factory inventory is becoming the rule rather than the exception lately. The result of this is that dealers need more cars to sell, as they cannot meet rising demand. An online survey found that more than 160 of 244 responding dealers – representing the spectrum of automotive brands – had too few vehicles to sell. An even greater number of respondents admitted to losing sales as a result.

Dealers losing buyers over low inventory

Numerous dealerships are reporting that motivated buyers are leaving discouraged over low inventory. Not enough GMCs, Hondas, Hyundais, Chevrolets or other vehicles are available, which constitutes a wide portion of the automotive spectrum. One dealer told Automotive News that automakers “have driven supplies too low,” yet dealers like him are certain they could sell more if stock was available. Cars like the GMC Terrain tend to be among the most problematic vehicles to acquire for dealers, yet makers like General Motors, Ford and the Chrysler continue to take a hard line on boosting profits while maintaining low inventory. Dealers are worried that that automakers may be cutting too much.

Factories are trying to help

Helping dealers is a priority for automakers, but these same automakers are cautious to avoid the overproduction that drove the industry to the gates of ruin. Dealers don’t want more cars than they can sell, either. The old days of gigantic incentives, low resale values and other desperation practices must be avoided at all costs, GM spokesman Tom Henderson told Automotive News. Some adjustments are necessary, of course. For instance, in order to meet recent demand for the Chevrolet Equinox and GMC Terrain in some areas, General Motors renovated an unused area of an Ingersoll, Ontario, manufacturing plant so that more bodies can be made. Since there’s no room for the bodies on the assembly line under the current production schedule, however, GM is sending the new bodies to another plant located two hours east for paint and finish.

Aug. 1, 2010 and Aug. 1, 2008: Contrasting Stock

The Automotive News Data Center compiled the following data regarding average dealer stock on August 1, 2010 compared with August 1, 2008. The difference is large, despite a separation of only two years:


Dealers do have cars to sell, regardless. You need auto loans to buy



Automotive News

Comments are closed.