We always have a choice. I was reading about the life of Roger Crawford, a tennis player, and a motivational speaker. He was the first Division I college athlete to compete with a disability affecting all four limbs. Crawford was born with ectrodactyly and only has three fingers; one on his right and two on his left. He is also missing his left leg and some toes on his right foot. Sports Illustrated has recognized Roger as “One of the most accomplished, physically challenged athletes in history!” He’s also the recipient of the ITA Achievement Award, presented by the Tennis Hall of Fame. His most famous and favorite quote is, “We are a product of our choices, not our circumstances.” That is never more applicable than it is today in our industry. As I wrote in my last article, the automotive industry is unfortunately finally feeling the negative consequence of Covid, and a robust automotive strategy is the way to continued success.
What does the Covid impact look like today? First, sales are slowing. The available supply of new vehicles was down at the end of April by 40% from the same period in 2021. That is about 800,000 vehicles less than the supply a year ago and 2.2 million less than in 2020. However, don’t make the mistake of thinking new car sales represent demand. That is not the case. The lack of inventory is holding back sales as the industry contends with multiple disruptions to the supply chain. This week, Toyota canceled another production shift due to a water availability issue. Second, the surge in COVID-19 cases has also triggered lockdowns and factory closures in China. The chip shortage continues along with the scarcity of other parts. Finally, the war in Ukraine, a primary source of wiring for European automakers, has disrupted production, particularly of German vehicles.
Those are the covid impacts, but there is good news. The American economy is still robust, and the pent-up demand for vehicles is substantial. The estimates are that 4 million to 5 million potential buyers were stuck on the sidelines because “they cannot find a car to purchase” according to Ally Financial. This considerable demand was more than enough to counterbalance the hypothetical 10 percent of buyers leaving the market. Overall, used-vehicle demand wouldn’t change, according to Ally. Some industry analysts feel sideline buyers will step in to fill the void as rising interest rates push consumers to older vehicle segments.
The message from the experts is that the slowing of new and used sales does not represent demand, which is, again, strong as reported in Automotive News HERE. The lack of inventory is holding back sales as the industry contends with multiple disruptions to the supply chain. Building a plan to take market share through acquiring “The Right” inventory is critical. Price is a significant factor and has to be considered; however, cars are being sold. A strategy that does not back off but forges ahead with surgical execution will see exponential success. The question is, what position will you take for the rest of the year? Hold back and wait or formulate an aggressive acquisition strategy to take market share and grow. Your choice, not your circumstance, will determine your future. The choice is yours.
The Automotive Advisor Team