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Tuesday, 28 July 2020 16:26

Auto Dealers in States With New Virus Outbreaks Have a Bigger Problem: Low Inventory

Written by Keith Laing, The Detroit News
Dealers in states like Texas and Florida that have been hit hard by the latest wave of COVID-19 infections say it hasn't hurt business yet. But they worry about new shutdowns and the low inventories of new vehicles  Dealers in states like Texas and Florida that have been hit hard by the latest wave of COVID-19 infections say it hasn't hurt business yet. But they worry about new shutdowns and the low inventories of new vehicles  AP

Index

Despite sharp spikes in the number of coronavirus cases in Texas and Florida, auto dealers in two of the nation's largest markets say traffic has largely stayed steady.

The bigger problem, they say, is new-vehicle shortages as auto plants try getting full production restarted after COVID-19 plant shutdowns.

 

Unlike states like Michigan, which shut down dealerships when the pandemic first flared, those in the South have largely stayed open. And dealers have learned how to somewhat ease the concerns of buyers who might worry about exposing themselves to the virus while kicking the tires in a showroom.

 

W. Carroll Smith, president of Monument Chevrolet in Pasadena, TX, near Houston, said he hasn't seen a big drop-off in business at his dealership as coronavirus cases in the state have spiked over the past two weeks. 

 

The problem is, a lot of those people are buying used because there isn't enough new product on the lot. Simply put, Texas is truck country, and Smith needs more pickups.

 

"Normally 90% of my sales are trucks," he said. "The challenge, especially for us as a GM dealer, is we had the plant shutdowns coming off the strike. It's hard to know what volumes would be if we had more inventory."

 

Michelle Krebs, a senior analyst for Autotrader, said her organization is not seeing a significant sales downturn in hot spots like Texas and Florida based on their internal data.

 

"That’s likely due to the fact that those states have not totally locked down, as Michigan, Pennsylvania and New York did in the early days of the pandemic," she said. "In addition, dealers now have figured out ways to accommodate consumers who are nervous about coming into the dealership---like online buying and vehicle pickup and delivery." 

 

Krebs said the biggest threat to new-vehicle sales is lack of inventory, which she said is the lowest in almost nine years. July sales likely will be limited by low supply.

 

"Supply is particularly low in pickup trucks, both full-size and midsize. Texas is the biggest consumer of trucks, so sales there could be hampered for that reason," she said. 

 

Alan Brown, general manager of Sam Pack's Five Star Chevrolet in Carrollton, TX, north of Dallas, wishes he had more new Chevys to sell.

 

"It's been a unique time because you got plants that are saying they're open, but I think plants are struggling with employees showing up," he said.


"You don't see convoys of trucks going down the road, so even if you've got new cars being built, we know they're not being delivered. There's a labor shortage, or a labor fear of being out there on the open road making deliveries." 

 

Brown said he normally takes in about 281 new Chevrolets per month, but during the COVID-19 era he's down to 61. His sales goal is at least 63 per month. 

 

"Definitely, being in Texas, our truck inventory is down," said Brown, adding he usually keeps 60 to 70 pickups in stock but has just 11 now. 


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