Covid-19 has forced many industries to adjust to a new way of doing business and the automobile industry is no different.
One lesson the global pandemic has taught automakers and dealers is that they don’t need huge inventories on the ground to continue to sell cars, says Mike Sadlock, general manager of Grainger Nissan of Anderson.
“In today’s world, today’s economy, the auto manufacturers are realizing that we don’t have to keep 400 cars on a lot for a dealer to sell 100 to 120. We can keep less than that,” Sadlock said.
“That’s a big expense for dealers,” Sadlock continued. “We finance those cars until we sell them, so it’s an overhead for dealers to pay interest on those cars and the payments on those cars until you come buy them.”
One way Grainger Nissan of Anderson and many other dealers have adapted to vehicle shortages –brought about first by a lack of semi-conductors, seats, door panels and other parts when manufacturers shut down at the beginning of the pandemic, then worsened by disruptions in the supply chain – is by pre-selling cars.
“In one respect it’s a little different and you’re not going to see the cars that you once saw, but we have cars in the pipeline that you can lay your name on and say, ‘hey, I want that one,’” Sadlock said.
Delivery can take a couple of days or a couple of months, depending on where the vehicle is being manufactured and where it is in the production cycle. Grainger’s inventory consists of cars built overseas that travel by ship, in Mexico which are shipped by rail, and in Smyrna, TN that are delivered by truck.
Demand for new vehicles is extremely high, Sadlock says, with Grainger Nissan of Anderson awaiting 200 cars now in the order bank.
“It’s created a little bit of a fever for folks to go ahead and get their name on a car,” Sadlock said. “I think it’s also kind of like Christmastime. There’s an anticipation about opening the gifts. There’s this anticipation of my car is coming and it’s my car. Nobody else has driven it. It hasn’t been sitting on the lot and had 33 people sitting inside of it. It’s mine.”
For those considering buying a new car in today’s economy, Sadlock offers the following advice:
Be flexible on color and equipment choices. Most manufacturers are on a fixed production cycle, which means they are building cars with the options for which they have and can readily obtain parts and supplies.
Be patient. Understand that the present state of the automobile industry is different for dealers, as well as consumers. Delivery schedules are based on manufacturers estimates, with many factors such as shipping delays affecting those projections.
Have fun with it. Know that when your vehicle comes off the truck, you’re the first person to sit in it.
Sadlock sees the semi-conductor shortage easing a bit but warns that real relief may not come until mid to late 2022. And with ongoing supply chain issues, Sadlock says the used car market will continue to be red hot.
“If you haven’t had your used car looked at and gotten a figure on it, you need to,” Sadlock said. “We get to see advance copies of what the (Kelly Blue) book’s going to do. Normally around the 20th of the month, we can see into the next month what the values are going to do and all week we’ve been going, ‘Wow, these cars are going up again.’ I’ve got story after story after story where customers bought a car two or three years ago and they literally drove it for free because we’re giving them more money now than they paid for it two and three years ago.”
For more information, visit graingernissanofanderson.com or call (864) 324-0650.
