When coronavirus came banging on the door in March 2020, the auto industry felt an immediate effect and second-quarter sales nationwide plummeted to their lowest point in 11 years.
But the industry made a healthy comeback by summer and three local dealerships said 2020 overall wasn’t nearly as bad as it could have been. Even so, they’ve been wrestling with another problem: They don’t have nearly as many vehicles to sell, and that’s a problem that could be around a while.
Steve Beck, owner of Beck Motor Co. in Pierre, summed up his new-vehicle inventory in one word: “Slim.”
“It’s as low as I’ve ever seen it,” he said Wednesday, two days before marking his 30th year in the business. “It’s definitely different and something we just have to deal with.”
Beck usually has 150 vehicles in stock; this week he had 38.
“Typically, we’d probably have 60 or more Silverado pickups,” he said. “Right now, we might have a couple.”
Bryan Boocock, owner of Wegner Auto Co. in Pierre, said their inventory is down 40 to 50 percent, with SUVs and pickups hardest to find. Boocock, a fifth-generation auto dealer, typically has 175 to 200 new vehicles on his lot. Today, he has 85 to 90, he said. He has about 75 used vehicles available, about half of what’s typical.
If you want to special order, it’ll be at least a two-month wait. Boocock said he has a pickup on order that will keep the new owner waiting 15 months.
Boocock and Beck said customers notice the emptier lots.
“We have people daily basically saying, ‘Where are all your cars?’” Boocock said. “We’re selling them like crazy, we’re just not getting as many new cars in.”
Beck said the lack of inventory is “frustrating for the sale staff. But almost every transport that comes in, the vehicles that are on the transport are already sold or people are waiting to see them to buy them.”
What’s the problem?
Blame it on COVID-19. While vaccinations are rolling out across the world — faster in some places than others — the auto industry is playing catch-up. The pandemic shuttered production plants or slowed them down as companies put worker safety first. Some cut the number of shifts or workers on duty to promote social distancing while others closed as science tried to figure out the virus or their countries experienced outbreaks.
But the bigger problem comes earlier in the process: Manufacturers don’t have everything they need to put a vehicle together.
The biggest issue is an international chip shortage, those microprocessors used in everything from gaming devices to personal computers. The pandemic spiked demand for electronics and the subsequent shortage is now staring the auto industry in the face.
Several automakers have warned of production slowdowns — GM, Ford, Volkswagen, Honda and Fiat Chrysler.
Analysts say the shortage could continue into the third quarter of 2021, and the chips could cost 10 to 15 percent more, pushing up car prices.
Don Gordon, owner of Fine Line Auto, said it’s a basic supply chain issue: Fewer new vehicles going out the door means fewer used vehicles coming in.
He likes to have 90 vehicles on his lot in Fort Pierre but is down nearly a third. He gets vehicles from trade-ins and auctions but said that since the virus, “There just wasn’t as much out there and more people are competing for them.”
As more vaccine is distributed and fear subsides, he hopes to see a change by year’s end.
Gordon says he’ll survive, especially after overcoming virus surges, a contentious election and a 50 percent drop in business during the initial outbreak “that made me start sweating bullets.”
The good news for buyers, Beck said, is that their trade-ins are worth more.
“Even though used-car prices have been increasing, it also means trade-in values are increasing as well,” he said, adding that he also hasn’t seen new-car makers increasing prices “any more than usual.”
“It’s really hard to say how long this is going to take,” Beck said.
But Boocock said it could be a lot longer than anybody thinks. “I think we’re a few years away, three to four years away from getting full-on pre-pandemic,” he said.
International analysts are all over the board with predictions, with some seeing relief by year’s end, while others bring up yet another shortage — resin used in some auto parts.
But the industry is seeing dramatic increases in sales over last year and, to a lesser extent, production.
Beck, Gordon and Boocock all said 2020 was a good year, and nobody was laid off. Customers who needed heavy-duty vehicles to head into the outdoors after ditching plans for out-of-state vacations helped, they said.
Gordon said his customers “are ready to be over all this. Let’s get back to normal.”
Beck, with three decades in the business under his belt, just wants to move on.
“It’s something I’ve never experienced and hope to never experience again,” he said.