Car Dealerships Worried About Inflation, Inventory, Rising Costs40
Cox Automotive recently published the results of its Dealer Sentiment Index, which saw the forward-looking market outlook dip as many car dealerships expressed concern over inflation, dwindling vehicle inventories and rising costs.
Cox surveyed 1,040 U.S. car dealerships between July 26th and August 9th for this study. For each aspect of the market surveyed, respondents were given an option related to strong/increasing, average/stable, or weak/decreasing, the research firm says, along with a “don’t know” opt-out. This allows the company to gauge overall dealer sentiment regarding the industry and the challenges it’s currently facing.
The three-month forward-looking market outlook index “dropped sharply from the previous quarter,” according to Cox Automotive, falling to a record low for the index and returning to levels not seen since the height of the COVID-19 pandemic in the second quarter of 2020. Cox also found that inventory was the second leading factor impacting dealer business, however domestic brands are currently faring better with regards to production setbacks than most Asian brands. The economy was the second leading factor impacting dealer business, followed by market conditions, interest rates, and political climate. Dealers also expressed worry over the possibility of a recession and lagging consumer confidence.
Cox Automotive Chief Economist Jonathan Smoke said unique market conditions are causing worry among car dealerships at a time when sales are typically very strong.
“Importantly, a drop in current-market sentiment is not typical in the third quarter,” he said. “The third quarter is usually mostly stable and, for franchised dealers, is often improving. There is typically excitement building with new models rolling out and energy for the new-vehicle market through the fourth quarter and holiday seasons. That is just not the case this year.”
While dealers remain concerned about inventory and costs, supply chain shortages are slowly beginning to improve. Cox’s new-vehicle inventory level index improved was up significantly from one year ago in Q3 at 31, but still far behind the Q3 2019 index of 61.
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It will be interesting next year as inventories will recover but people can’t afford new cars with inflation at 8..5 %.
We all will be for a tough year next year as the economy is going be in pretty bad shape here and globally. Europe in real tough shape already.
Fuel cost will climb too as we have depleted the national reserves and we now have to refill them. Winter fuel use also will play a roll.
The strongest will survive and the weak will die in all dealers and to be honest that will not hurt GM as they have way too many dealers vs Toyota and others.
The perfect storm that will work out for me….if GM can deliver on finished products that I have been waiting to buy!!! My volt is aging out and will be 10 years old by then.
Eff the dealers
The dealers have zero sympathy from me with their outrageous pricing and mark ups. I hope they all choke. Purchasing a vehicle thru a dealership is such an archaic and aggravating experience. I really hope that changes in the near future. That is the absolute worst part or buying a vehicle!
The inflated pricing and the demanded “adjusted market value” are infuriating enough. Just as bad or worse: all of the little patty-cake games they want to play. I have neither the time or the patience. This is the car I want; no tire protectant, nitrogen filled windows, or life-time washer fluid refills. How much is the car; don’t talk to me of payments.
Buying an automobile should be no more difficult than purchasing a refrigerator or television set.
If you do business with someone that treats you like crap. You’re the problem!!! They can’t stay in business without customers. So, grow a pair and walk away. Go out of town if you have to! You can find a good a dealer if you look. I’m sick of hearing, the dealer screwed me! No, you screwed yourself. Odds are the screwing took place in the finance office. That’s why the finance guy or gal folds your paperwork up and puts in an envelope for you. They don’t want you to see the crap they sold you before you get home.
When I purchased my 17 Cruze RS Hatchback, I located one 70 miles away that was $6000 below MSRP on the dealers website. Printed the page, walked in and paid exactly that. Today, the local Toyota dealer won’t even open the Tundra door for a peak to look inside! Had to be pre-approved to even drive one and they want $10,000 over MSRP.
Funny you complain about dealers and don’t say a word about manufacturers. In the last two years, GM has pretty much eliminated rebates and raised prices on every vehicle. Yet no one complains about that. When you factor in the loss of rebates and price hikes, trucks have gone up well over $10,000. Now, who’s gouging who. I can’t wait for manufacturers to take over dealerships and competition is eliminated. They will give you a trade price in that will be it. Every GM company store will have your trade amount in the computer and that will be it. No more shopping for the best deal. I hope you get what you want! Don’t tell me costs went up for GM and dealership expenses went down. I’m not buying it!!!
The current dealership model needs to die anyway. Buying a car is the worst product buying experience for many people.
Automotive Groups have destroyed the dealership model. They have no interest in local communities or the people living there. They have one goal and that’s seek and destroy the consumer. Find a good locally owned dealership. One where the dealer is in the store five days a week and lives in the community. Typically, they care about their reputation and usually go the extra mile taking care of the consumer. Out of town owners don’t care. They won’t see you at the little league games or the local restaurant.
Agree, but destined to be. Walmart did it to dept stores. The game of monopoly in real life.
True. Sharks circle when they see a financial opportunity. I’ve worked in dealerships for 30 plus years. I refuse to work for auto groups. The character of the people running 99% of those stores amazes me. I wouldn’t want them near anything I owned. It’s a wonder they aren’t crippled by lawsuits from their employees and customers. These high rolling managers know, they maybe have 12 months of employment and it’s over. They will lie, cheat, and steal on steroids until the gig is up. The people working for them feel dirty just being in the same room. Just glad I’m nearing the end of my career. Hopefully, I just need a couple of more years with an independent operator. The sad part is manufacturers don’t reward the good operators. They don’t care either. Those wanting manufacturers to takeover, be careful what you wish for. It won’t be better.
The old time mfgs would like to sell direct but buying out dealers is very expensive.
What has hurt most GM dealers is there are too many dealers and they end up competing with each other and no one makes money. This in the 3nd hurts the dealer experience.
None of these dealers look to hurt the customer but when they get to where they make less money on a deal they have less they can offer to the customer in service or the ability to hire the best staff to do the work.
Often it forces the dealers to poor service and even dishonesty.
Toyota has just under 1500 dealers,
Chevy has around 3,000 dealers.
Hyundai dealers 800.
Chrysler Jeep 2500.
The big three each have way too many dealers and they hurt each other and limit the quality of service.
On the other side of the coin, at least with Toyota, Ford, GM, MoPar, I can shop a deal even though I am in a smaller city. (82,000, maybe 120,000 in the “greater” area. We lost the one good Ford agency in the area, and the other two are infuriating.
But, that also circles back to the idea that the dealer model is archaic.
The intent is to sell direct at some point and not have to buy out all dealers.
Just bankrupt them with constraints and limited inventory. That’s the plan.
I do not think Dealership Laws will allow Direct sales ever. I hope the Laws Change but I highly Doubt it as the Lobbyists will never allow it and will keep paying off Politicians with whatever it takes.
This is all the opposite of logical. I want to cross shop dealerships. I know what I want, and I know what the deal should be. Finding a dealership that will do that deal is the problem. They are all running some con, including the local dealers you all seem to think are good.
Reduce the number of dealers and you reduce the chance I can find the right deal
You can easily cross shop dealer via the web today and never leave home.
I have worked in small and medium sized markets. If GM closes their small market stores, they will lose business. The people in those small market stores are way more loyal than any other market. 50% of the customers in those markets aren’t so much brand loyal. They are loyal to the dealer taking care of them. They know the dealer on a first name basis. If, you push those people to do business in a medium size market, they will buy another brand. How do I know, those customers have told me so. The customers in the small market were the ones lobbying GM to keep their dealer in business during the bankruptcy. Customers weren’t lobbying for auto groups or larger dealers. People in small markets are much more loyal. Especially, to second and third generation dealers. I work in a small market store now. The store hasn’t lost money yet. It was amazing when Covid hit. Some people actually came in and traded because they were worried about the dealer. They decided to trade 6 months to a year early. You won’t see that in any other size market store. One customer told me, I drive a Tahoe because I can buy it and service it in my community. If I have to drive 40 miles to buy a vehicle. I’ll buy a Lexus. The business in this store is around 65% to 70% repeat. Walmart didn’t become powerhouse because of large markets. They built a foundation in smaller markets. You don’t see them wanting to close close smaller market stores. GM would be better off scaling back stores in larger markets. I’m not a dealer. It doesn’t benefit me either way. Just what I have seen personally.
They would like to position the dealers to where they handle populated regimes and most will be on interstates.
The idea is to have one dealer over a specific number of dealers and not 5 in a half out of each other’s.
Most major cuts will be in cities with a large number of dealers.
Toyotas distribution and numbers are about right for most markets. No one has to look hard for a dealer but they also do not have 5 to one number of dealers in one market.
The big 3 have all these dealers because many of them are”farmer dealers” that keep rural areas rolling.
The Japanese,Korean and European manufacturers are not interested in these customers because if rural customers prefer their product they will go to the city for their needs.
GM should do away with all auto group stores and keep dealers that will focus only on one store. With more than one, dealers can hide. That’s when things go off the rails. No one is watching the store.
The market has been following simple economics. Supply and demand need to equalize. A decline in consumer interest and rising rates is what the system needs to reset itself.
The repercussions of closing schools for 2 years in some areas and convincing people to lock themselves in their homes with a paycheck of a job has broken part of our society.
When sitting on your…. Butt pays more then an entry level job, you’ve just created entitlement. I have young family members that made 50k a year sitting at home with their parents.
Time to wake up and grow up.
Do we care what they think? Most dealerships, not all, have just gouged the American public for the last 18 months. The game is up and enough with their take it or leave it attitude and huge ADM’s. As with other comments in this thread, their unbelievable attitudes amazed me and I made it clear to them. Acura, OKC, from whom I had bought 5 previous vehicles; 4 MDX and 1 TL, all with top trim levels, treated me like anybody else; nothing for you, get in line, huge mark-up and no interest. You call us, we wont be calling you! I told them they have lost my business forever. Bought a Genesis GV80 instead which the wife loves.
The dealership model, those that run them and the protection afforded by state law is archaic and will end at some point soon. No sympathy whatsoever.
My father who passed away in 2020 bought a blazer rs in 2019 as his last vehicle. Family member had gone with him to make sure he wasn’t taken advantage of. He had been buying vehicles at this Chevy dealer for years they knew him. He went into finance office alone and the scumbag finance manager got him to buy a $2000 extended warranty. He put 900 miles on the car before he passed he was 82yrs old. We found the paperwork in the car and demanded his money back. It took this dealership 6 weeks to pay it! The salesman is the only one that apologized. I tell anyone I can about this experience so much for dealer loyalty. Never let your elderly family buy cars on their own! Up yours GM and your scumbag dealers.
Why didn’t your dumb a$$ go into the finance office with him? Got to blame someone else for your mistake. I have seen plenty of customers saved from financial ruin because of an extended warranty. Two products in the finance are useful. If they are priced right. Gap Insurance and Extended Warranties. Anything else is typically BS.
I just told the finance manager I’ll walk if they try pushing any extra warranties or services on me when signing paperwork. They didn’t say anything after that. It’s this way wherever you go not just dealerships. Purchase any appliance and they will try and get you to buy longer warranties. Buy most any electronic devices and its the same.
I’m ready to buy my GMC Canyon on Amazon. Dealers have been screwing folks for years, time to turn the tables on them.
Dealers do not force anyone to take a bad deal. People make bad decisions.
Using a car is not easy and you need to do your home work.
You just need to be smart and if the deal suck just walk away. I had a dealer try to hose me I walked and went to the web found a better model and deal.
Never let the dealer get your emotions as you often will make a mistake.
My last deal I got up to walk 3 times before I got the numbers I wanted to buy.
If you need travel hours to get the right deal or take days or longer to ponder the deal do it
I drove 3 hours to buy my ZR2 at MSRP with price protection and employee pricing.
Local dealer (small) refused Employee pricing and a 5k “protection” package was non negotiable.
Sales are sales, no one is forcing you to sign. Say no thanks, walk away, make some phone calls.
Competition is a great thing with the current dealer model. But not for poorly educated consumers. You can save ALOT of money with the way the current model is constructed. Use your head gentleman.
I’m amazed you received employee pricing. I live in an area with a lot of retired GM employees. I haven’t seen a dealer do any factory plans for over two years. Well done. I can’t even buy on the dealership employee plan.
We just bought a Blazer RS with Employee pricing in April. Several dealers said it was up to the dealership. We told them it would be a deal breaker.
Is this article for real?
Maybe these losers should stop stealing money from their Customers. Worried about inflation when they’re one of the main reasons for it.
Why not just do direct delivery. Time to get with the 21st century. I would gladly accept a new enclave and wash it myself and not have to pay the extra 4 or 6 thousand the dealer adds on. Pass the Saveings onto the customer. I would think even a test area of something like this would be great. I bought a new 2017 Enclave Premium loaded in 2018 Brand new. Not one problem except mirrors made little bit of noise opening closing. Had both replaced under warrenty.
You really believe savings would be passed along to the customer. That never happens.
Well people like easy purchases and best deals. If these car companies want to stay in business they better start putting the customer first. It’s too easy to walk away from a deal and buy a car from somewhere else or not buy one at all.
WE REALLY APPRECIATE YOUR BUSINESS BUT I WANT 20000 OVER STICKER!!!! BULL SNIT