Strained Dealer Inventories Tightening as Chip Shortage Lingers

First Up 04/05/21

April 5, 2021

Nissan's No. 2 Entrusted with U.S. Recovery to Shore up Alliance
Ashwani Gupta had been COO of Mitsubishi Motors Corp. for barely seven months when he sat down to dine with its chairman and talk about the troubled carmaker's revival plan. But the discussion didn't get far. Automotive News reports that the meal was soon interrupted by a call from another company in even more dire need of help. It was October 2019, and Nissan wanted Gupta as its own COO to help pilot Japan's No. 2 automaker out of its tailspin following the arrest and ouster of former boss Carlos Ghosn. Now in his role as Nissan COO, Gupta not only spearheads the carmaker's make-or-break midterm revival plan, he takes direct oversight of the critical North America business. In order to right the alliance's ship, Gupta knows he has to straighten out Nissan's U.S. market. Much of the friction in North America over the past decade has been sparked by dealer discontent over Nissan's aggressive stair-step sales incentives. Last week, the company officially ended that program. To learn more about Gupta’s plan for Nissan’s dealer network, click here.

People Are Spending More on New Cars, But Prices Aren't Necessarily Rising
The average cost of a new car is now hovering near $40,000. Sure, that figure may seem exorbitant to many shoppers, but it only tells part of the story. A new Consumer Reports study indicates the reality is that the market has been quite complicated since the pandemic started more than a year ago. COVID-19 disrupted buying habits, manufacturing, and personal finances, all leading to factors that have made the new-car average cost creep up. But at the lower end of the market, the prices for some mainstream vehicles have effectively decreased over time after accounting for inflation, and there are some really good deals. "Once you adjust for inflation, many popular cars like the Toyota Corolla and Subaru Forester are actually cheaper today than they were 20 years ago. And that's despite the fact that today's models are better in just about every way,” says Jake Fisher, senior director of Consumer Reports’ auto test program. For the full story, including which models are more expensive today and which aren’t, click here.

Strained Dealer Inventories Tightening as Chip Shortage Lingers
An unexpected silver lining to the yearlong coronavirus crisis has been record profits for auto dealers, as consumer demand for heavily optioned crossovers and pickups keeps transaction prices and gross profits high. But, according to Automotive News, dark clouds are moving in again. Shortages of semiconductor chips continue to crimp global auto production, bringing inventories of popular vehicles — even American pickups — to worrisome levels on some dealership lots. Improving weather and widespread COVID- 19 vaccinations could now push retail traffic even higher — meaning still-tighter vehicle supplies if chips remain scarce. "Our inventory level is dwindling to a fraction of what it's been in the past," said Jim Moshier, general sales and service manager at Ricart Ford in Groveport, Ohio. "It looks like it's going to be a pretty desperate April. To read more about the sales challenges ahead, including which brands have been hardest hit, click here.

Crazy, Hazy Days of Diesels Are Long Gone
Diesel engines once were – and, to many people, still are – considered the poster child of automotive polluters. Diesels once deserved the bad rap. Many diesel-powered vehicles of the past belched thick, dark clouds of pungent tailpipe soot. But, Wards reports, diesel technology has come a long way. “I’m no tree hugger, but I do like having a nice planet to live on,” says Keith Lindsey, a veteran diesel auto technician. He’s now a trainer and manager-technical service for TA-Petro, makers of aftertreatment fluids that are sprayed into modern diesel exhaust systems to reduce emissions. Diesels (mostly pickup trucks) comprise about 3 percent of U.S. light-vehicle sales. Modern diesels are lauded for their reliability, fuel economy, torque, towing capacity and long-distance endurance. People who buy them tend to love them. A properly maintained diesel engine is not an environmental bane, says Lindsey. He emphasizes that modern diesel systems come with a series of sensors that basically center on one main thing. For more on how diesels have evolved, and what the future holds for them, click here.

CarMax Targets Crown in Online Used-Car Buying
As part of its quest to be at the leading edge of digital retailing, CarMax will take vehicle-listings and research company Edmunds — and a joint instant appraisal-and-offer tool the companies have launched — completely under its control. According to Automotive News, CarMax CEO Bill Nash called out that tool last week when talking about why the used-vehicle retailer's investment in Edmunds had been fruitful. "Early response has been strong with online buyers quickly exceeding our expectations, providing us with a clear pathway to become the largest online buyer of used autos from consumers," Nash said last week as CarMax also announced higher revenue but lower earnings for its fiscal fourth quarter.” CarMax took a $50 million minority stake in Edmunds in January 2020 and last week announced it would fully acquire the company. The deal is expected to close in June. CarMax didn't disclose the purchase price it is paying to buy the rest of Edmunds but it did say the cash-and-stock deal values Edmunds at $404 million. For more on the deal, click here.

Dell Technologies Partners with AIADA
Dell Technologies has joined with AIADA as an Affinity Partner, offering the membership an exclusive new benefit to help upgrade and improve their technology. The user-friendly program gives AIADA members discounts of 5-10 percent on purchases of Dell products – and those discounts are stackable with additional Dell promotions, which could allow AIADA dealers to save even more on their technology upgrades. “Dell Technologies offers a wide range of business tools that can help dealers increase efficiency and productivity,” AIADA President and CEO Cody Lusk said. “Having access to those tools at a significant savings is a big win for our members.” AIADA members can access the new member benefit by visiting to receive a coupon by email. Read the full press release about the new partnership here