AIADA News: Spring 2021

First Up 04/26/21

AIADA News: Spring 2021

Spring is in full bloom in Washington, and AIADA remains committed to advocating for international dealers like you, and the issues you care about. Find out how AIADA is working for you this year, and how you can get involved, by watching the spring news report. Click here to watch, and don't forget to share it with your colleagues and employees. 

Buyers Aplenty, But Dealers Are Running on Empty

Vince's GM Center is not going out of business. But the dealership's lot in eastern Colorado is so abnormally sparse that some customers have assumed that it is, reports Automotive News. With assembly lines at many North American factories halted because they can't get enough microchips, and demand for new vehicles booming again, Vince Schreivogel is one of many dealers across the country disconcertingly watching their inventory wither away. "At first, [customers] couldn't believe we couldn't get stuff, but then it came into reality where they went online and nobody else has it either," said Schreivogel, who had fewer than 20 new vehicles in stock last week. It's an awful time for dealers to be running short. The U.S. economy is making a comeback, and consumers are flush with tax refunds and another round of stimulus checks. The spring selling season is heating up — so much so that one forecaster says the industry could have its strongest sales rate in nearly four years this month. That is, unless too many shoppers give up because they can't find what they want. Read more here (Source: Automotive News). 

U.S. Auto Dealers Are Winners as Chip Shortage Lifts Vehicle Profits

Automakers from GM to Ford Motor and Toyota have cut production this year due to the global semiconductor chip shortage. While those automakers have been pinched, dealers are experiencing the best of times, reports Reuters. Not only can they charge full price for the hottest-selling trucks and SUVs, but many also have reduced promotional spending and other costs required by full vehicle lots. This means record profits for car dealers. AutoNation Inc Executive Vice President Marc Cannon called it "Camelot," comparing it to the legendary castle and court of King Arthur. He wondered whether this could turn into the new operating model in an industry where consumers in the past were conditioned to seek incentives and rebates that reduced vehicle prices by 10% or more. At his company's Toyota store in Maine, Todd Skelton, chief executive of Prime Automotive Group, had 62 cars in mid-April, down from the typical 300 vehicles. One concern of Skelton's is whether reduced supply will drag down overall profits despite higher margins. Read more here (Source: Reuters). 

Used Vehicles Become a Newly Appreciating Asset

Like many retailers, Zeigler Auto Group of Michigan has always had a policy of turning used vehicles quickly because used cars and trucks depreciate in value as they sit on the lot. Or at least they used to, reports Automotive News. "We are now off of doing that because [used vehicles] are appreciating," company President Aaron Zeigler told Automotive News. "And we believe that they're going to continue to appreciate moving forward with the lack of new cars." Zeigler and other dealers are living through an unprecedented time in the used-vehicle market. A perfect storm of factors has led to high demand and low supply — and skyrocketing wholesale values. Wholesale used-vehicle prices are setting a record this April, while retail used-vehicle prices have climbed at their typically slower rate. In April, those values have surged to record levels, market trackers say. Dealers are buying used vehicles at auction for eye-popping amounts — sometimes even more than the car's original sticker price — even as they scramble for other ways to obtain used-vehicle inventory. Read more here (Source: Automotive News). 

Tesla is Expected to Post Record Earnings at Start of Turbulent Year

Tesla Inc. is expected to post a record quarterly profit after the bell, fueled by rising deliveries despite supply disruptions and mounting concerns about the safety of its battery-powered vehicles, reports The Wall Street Journal. Tesla earlier this month said it delivered roughly 184,800 vehicles in the first three months of the year, more than double the number during the same period a year earlier. The company, which delivered nearly half a million vehicles in 2020, has said it expects that figure to rise more than 50% this year. Wall Street on average expects Tesla on Monday to report first-quarter sales of about $10.5 billion and net income of around $509 million, according to analysts surveyed by FactSet. The company generated roughly $6 billion in sales and a $16 million profit during the period a year earlier, when its lone U.S. car plant, in Fremont, Calif., was temporarily idled by the Covid-19 pandemic. Read more here (Source: The Wall Street Journal). 

Around the Web

GTO Engineering Squalo is Like a Classic Ferrari Built New, and You Can Now Order One [MotorAuthority]

Porsche Plans Battery Cell Factory in Southern Germany [Autoblog

Used Car Shoppers Might Find the Best Deals Over 100K Miles [Car and Driver

AutoNation Eyes 130-Plus Used-Car Stores by End of 2026 [Auto Remarketing