We’re Working Out Of New Vehicles

We’ve been advised for the final two years that, “it can worsen earlier than it will get higher”, however at what level do you elevate the white flag and acknowledge that we’re going through an automotive disaster by no means seen earlier than? The provision chain woes and chip shortages have made headlines for nicely 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 going through challenges that may inevitably disrupt gross sales and automobile availability for the foreseeable future.

How dangerous are the shortages? Effectively, right here’s the state of affairs for Honda.

To start out the month of April, Honda had 18,000 models on the bottom in the US for patrons to purchase, which this alone is nowhere shut to satisfy demand, nonetheless it’s gotten worse in Might with solely 12,200 new autos on stock. Mike Kistemaker, Honda’s assistant vp of gross sales stated.

“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 nicely over 90 %,” Kistemaker stated. “I’ve by no means seen a one-day provide of our product.”

A one-day provide signifies that sellers solely have sufficient CR-V’s and Civics to final a day; basically making it not possible to search out both automobile on the brand new market, and in case you 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 thus far had been hovering round 10-15 days, which isn’t the perfect situation, however a minimum of you’d have vehicles to select from.

Honda isn’t the one producer coping with provide points. Kia, whose managed to by some means have vehicles on the bottom are starting to really feel the results.

“We proceed to have challenges with manufacturing and distribution of our autos,” stated 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 had been resolved in a single day, the results of the final 18 months are going to be felt for fairly someday, as used automotive costs will preserve 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 nicely into the tens of millions, as factories aren’t producing sufficient vehicles to satisfy the demand immediately or into the close to future.

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