We’ve been informed for the final two years that, “it would worsen earlier than it will get higher”, however at what level do you increase the white flag and acknowledge that we’re dealing with an automotive disaster by no means seen earlier than? The provision chain woes and chip shortages have made headlines for nicely over 18 months, and whereas supplier inventories have been extraordinarily low, the market has continued to maneuver alongside, leaping over one hurdle after one other, however as we head into the summer time of 2022, producers, sellers, and shoppers are dealing with challenges that can inevitably disrupt gross sales and car availability for the foreseeable future.
How unhealthy are the shortages? Effectively, right here’s the state of affairs for Honda.
To start out the month of April, Honda had 18,000 models on the bottom in america for patrons to purchase, which this alone is nowhere shut to satisfy demand, nevertheless it’s gotten worse in Could with solely 12,200 new autos on stock. Mike Kistemaker, Honda’s assistant vp of gross sales stated.
“Which implies there have been solely 11 Hondas on the bottom on the common retailer and a three-day provide.”
Available in the market for a CR-V or Civic? Good luck.
“Completed with a one-day provide and switch charges nicely over 90 p.c,” Kistemaker stated. “I’ve by no means seen a one-day provide of our product.”
A one-day provide implies that sellers solely have sufficient CR-V’s and Civics to final a day; basically making it unattainable to search out both car on the brand new market, and when you do find one, you’ll be compelled to buy the minute you stroll into the showroom. To place all of this into perspective, ideally you desire a 30 day provide, and a few manufacturers earlier than 2020 had sufficient stock to final near 2 months. Producers up so far had been hovering round 10-15 days, which isn’t the perfect situation, however not less than you’d have vehicles to select from.
Honda isn’t the one producer coping with provide points. Kia, whose managed to by some means have vehicles on the bottom are starting to really feel the consequences.
“We proceed to have challenges with manufacturing and distribution of our autos,” stated Eric Watson, head of U.S. gross sales for Kia. “Our supplier inventories proceed to be at historic lows, someplace between seven and 9 days’ provide of autos on the bottom.”
Toyota can be in the identical boat, as they solely have 13,800 autos distributed amongst it’s 1,500 Toyota and Lexus dealership places.
Even when the provision chain points and chip shortages have been resolved in a single day, the consequences of the final 18 months are going to be felt for fairly someday, as used automotive costs will preserve their excessive resale values, and for the following few years these shortages will then create an absence of provide on the used market, as we’re now in a car deficit nicely into the thousands and thousands, as factories aren’t producing sufficient vehicles to satisfy the demand immediately or into the close to future.
To say we’re in uncharted waters can be an understatement, and in the meanwhile aid isn’t going to be on it’s means for some manufacturers till the 4th quarter of this 12 months on the earliest.