It doesn’t take long to shop for a new vehicle at Youngblood Kia in Springfield. As of early January, customers looking to buy one and drive it off the lot had three to choose from, said Youngblood Auto Group Managing Partner John Widiger.
Prior to the COVID-19 pandemic, the company would keep the lot stocked with 130-150 Kia vehicles, he said. But as the pandemic has led to supply chain issues worldwide, the automobile industry hasn’t escaped the impact.
The supply chain challenges have resulted in a shortage of new vehicles coming from manufacturers and delays at ports where the cars are imported into the United States. Although car dealers still periodically receive small orders of new cars, most vehicles in the shipments are usually sold by the time they arrive on the sales floor.
“We’re seeing two or three truckload shipments per week, but 80% of what’s coming off the truck is already sold,” Widiger said. “They have to fill the current demand before they can start to have excess to where we have a selection.”
The vehicle selection at Youngblood Nissan isn’t as dire as it is at the next-door Kia lot. Widiger said around 30 are available but that’s still down 85% from the typical 200 cars in stock.
It’s much the same in Marshfield at Don Vance Chrysler, Dodge Jeep & Ram, said new car sales manager Eric Quackenbush. The vehicle stock used to average 375.
“For the last six months, we’ve been running about 70 vehicles on the lot,” he said. “It’s pretty wild.”
Widiger said for every car the manufacturer has allocated to Youngblood, staff have made a copy of the build sheets, which indicate how the car is equipped, and taped them to windows of the showroom. That’s for the benefit of shoppers coming to mostly empty lots, as they can at least look at the build sheets of incoming vehicles that are not sold yet.
“We’re preselling inbound units at this point, anything that has not been spoken for,” he said, noting the dealership took 60 vehicle orders in December and has another 300 sold orders waiting to be allocated from the manufacturer.
Quackenbush said Don Vance Chrysler also is focusing on sold orders. For those who come in to order a vehicle, the wait is typically 10-12 weeks, he said, up from roughly seven weeks a few months ago.
“That’s the one thing we tell a lot of our customers is that we probably don’t have it on the lot,” he said. “If we don’t, we can order it specifically for you and get it here a lot faster.”
If someone is waiting to find something specific in stock, Quackenbush said unless they are shopping multiple stores, they probably won’t find it. For example, he recently did a search for the Don Vance Ford dealership, as a customer was looking to trade in a Ford F-550 for a new one. The search only turned up 152 new F-550 trucks in a 2,000-mile radius, he said.
While new vehicle sales volume was down 60 units last year compared with 2020, Quackenbush said the dealership has maintained its staff of 78 throughout the pandemic.
Employee retention also has continued amid the current challenges at Youngblood, Widiger said. While 95 employees were temporarily laid off in March 2020, roughly 95% of them were brought back by the end of the following month, as stay-at-home orders ended. The few that didn’t return either moved away or decided to find another job in the interim, he said, adding the company employs 120.
Annual sales volume of new and used cars declined about 30% in 2021, Widiger said, declining to disclose figures. However, he said profitability per car was about $1,000-$1,500 higher than pre-pandemic as car prices were increased.
Higher vehicle prices have been a source of frustration for customers, he said, as demand is far exceeding supply.
“It’s not been easy because people are used to coming in and getting a deal,” Widiger said. “The deal right now is to be able to get a car. If you were to order a Kia Telluride from me right now, you’d be on a waiting list for eight to 10 months. That’s how long it would take me to get you your car.”
Still, he estimates vehicle trade-in values are $2,000-$3,000 more than a year ago, which can help counter higher prices for purchasing a new or used car.
Buyers looking to bypass a new car search for a used one could be hit with sticker shock. In November, the average price of a used vehicle in the U.S. was $29,011, according to automobile dealer Edmunds.com. That’s 22% more than November 2020.
Average prices for new vehicles also are on the rise, according to Edmunds.com, reaching $45,872 in November. The year-over-year increase is nearly 15%.
An ongoing worldwide shortage of microchips for new vehicles has boosted prices for new cars, which in turn has affected the used-car market, according to industry officials.
“In pre-owned, we stocked up because it was the only thing I could control,” Widiger said, noting Youngblood has 170 used vehicles in its inventory. “We’ve been aggressively buying vehicles off the street, Craigslist, anywhere and everywhere we could find it. We’re actually paying our salespeople $300 for any car they can find that we can buy.”
Don Vance Chrysler has roughly 230 used cars in stock, a number Quackenbush said is boosted by trade-ins and staff buying vehicles at auctions.
“Every day when someone comes in here, we ask if they’d like to sell their vehicle,” he said. “Right now, they are worth a lot of money.”
According to Edmunds data, the average trade-in value in November was $22,918.
Quackenbush expects supply chain issues to keep ensnarling local dealers – and the car industry in general – for months to come.
“New car dealers are going to be dealing with this for probably a good portion of 2022,” he said.
Widiger’s forecast further pushes out that estimated timeline.
“I don’t see us being able to have it where a customer can actually walk on the lot and have somewhat of a selection of new product to choose from until the end of 2023 or beginning of 2024,” he said.
The expanded facility is expected to reach annual revenue of $650M.