Talk about making lemon meringue pie out of lemons.
The messed up global supply chain and worldwide semiconductor chip shortage has pummeled the auto industry. Overall car production is at it’s lowest output since the 1940’s.
Yes, that is correct, it’s the lowest it has been in almost 80 years.
However, the shortage of inventory because of the lack of chips is something that some auto dealers find kind of refreshing.
Rick Ricart is the president of Ricart Automotive Group in Columbus, Ohio. A story in Morning Brew quotes him saying that in the past, a typical sale would take four hours to complete, but now with the chip shortage, customers make decisions quicker and know that if they don’t move quick they could lose out on buying a new car, so the transaction now according to Ricart takes just 52 minutes.
Here’s another way that auto dealers now look at their new world in a favorable light according to the Brew story.
Manhattan Motorcars president Brian Miller said sales are down overall 20% because of the chip shortage, but 95% of his inventory sells out almost immediately, so they don’t have to do nearly as much marketing and advertising.
“I like this world,” Miller said.
While sales are down worldwide, and the industry as a whole lost $210 billion this year, retailers are saving on operating costs so their profit margins in many cases are up.
The story quoted the co-owner of a Dodge Chrysler dealership in Lancaster, California saying that he usually has 1,200 vehicles in stock, but now he only has 200 on his lot.
While the new car business is getting hammered, dealerships are still driving revenue through service and used car sales.
And as bad as the chip shortage is, somehow AutoNation, the largest auto retailer in the US had a record second quarter of 2021 with $7 billion in revenues.