Have you recently contemplated buying / leasing a vehicle? It's clearly been an unusual year, with COVID-19 shutting down or partially closing much of the economy. But individuals, families and small businesses still need vehicles. And with the once unstoppable "sharing" economy having taken a hit with COVID, many consumers are going back to basics -- seeking their own, new or used vehicle.
Those who were buying in Q1 had a "buyer's market." Many of the mainstream brands - FORD, ChryslerJeepDodgeRAM and others furloughed much of their sales staff, leaving just the sales managers who -- without sales staff commissions to pay -- were ready to rapidly cut great deals in order to move inventory and maintain sales volume. Manufacturers were also offering rebates and low or 0% financing to entice buyers to their computer and buy a vehicle online.
But that did not last for long. As the year progressed, and buyer demand increased back to prior levels, staff was brought back and vehicle inventory was down, due to factory shutdowns or slowdowns, for a period of months. Certain larger dealers who had more inventory have had record sales months but that has tapered off. A drive by most dealers and you will notice vehicles are not parked inches apart, they are far apart and that is not due to social distancing, but because what you see is all they have. Those storage lots full of new inventory are mostly empty now.
For the past several months, many new vehicles (e.g. certain Toyota and FORD trucks) have been in short supply, and dealer pricing has increased, in particular with limited production and performance vehicles and many used cars & trucks.
While new vehicle inventory is beginning to build back up, CARtegrity believes that it will be a period of months, possibly into Q1 2021, until new auto dealers are fully loaded up with inventory. The factories cannot run at 100% right now as they is high absenteeism at both the plants and the suppliers. It will take time to get the whole system back up to normal output.
As for pre-owned vehicles, demand is way up and, in many cases, there are more buyers than available used vehicles, pushing auction and retail prices higher.
While still attractive mobility options, Uber and Lyft have seen a drop off in user activity during the pandemic by certain consumers who have "back-stepped" and are once considering their own personal vehicles.
Recent Case Studies by CARtegrity:
(1) An Orange County-based real estate executive had been seeking for several months a Toyota RAV4 Hybrid XSE in Blizzard Pearl with a Midnight Black Metallic Roof. There were very few, mostly "inbound units" (from the factory), and CA dealerships were asking $3 - 5k over MSRP. A much better deal -- below sticker -- was found out of state and the buyer drove there to test drive, sign and drive.
(2) A "serial FORD Performance enthusiast" was seeking the top of the line "Golden Ticket" Shelby GT500. Most California dealers were marking up the limited production unit $40 - 100k over MSRP. Hard to believe, but true. Substantially better pricing was procured for a now very happy client in the Inland Empire.
(3) Senior citizens are sadly victimized all too often in the car buying process. With CARtegrity at her side, a Long Beach area senior, whose 1997 Toyota Land Cruiser was totaled in an accident, was able to purchase a CPO Ford Edge at a below market price, while the dealer still made some money. Win-win.