Car Pro Commentary: Incentives & The Upcoming Inventory Shortage

On Air Unplugged - The Car Pro Jerry Reynolds
I talked last Saturday extensively about a couple of things. One was the crazy incentives going on right now, and second was the impending shortage of new vehicles weíll see in June.

One person wrote me to question me on the inventory shortage. He did not seem to believe this was not only possible, but is a near certainty when you know the facts. It is really quite simple: the hottest vehicles sell first and there are none of them coming in for a long time.

The automakers set the massive incentives at the first of May, not knowing how much pent-up demand there was. So far, May is shaping up to be a banner month for sales in the areas where dealerships are open. One reason is the wide array of incentivesÖ.0% APR financing, deferred payments, massive rebates, help for those with poor credit and the list goes on. If the automakers could pull back on incentives, they would. It is overkill.

That leads us to the shortage. Factories have been closed for two months. That means no vehicles arriving at dealerships. Dealers have been selling out of the inventory they had on hand since late March. Most dealers keep a two-month supply of vehicles on hand, which works out nicely since replacement inventory arrives almost daily. Those shipments have not been coming in.

To make matters worse, Memorial weekend is one of the biggest of the year, which will further deplete inventories.

Some of the assembly plants came back online this week, but slowly, with staggered shifts, and often running into parts shortages. There are over 10,000 different parts that automakers purchase from suppliers-which are struggling themselves-and it only takes one little part to keep a vehicle from being built.

Vehicles successfully built now wonít arrive until mid-July, and those built far away wonít arrive until sometime in late July or after, especially those that have to come by boat.

BOTTOM LINE: The summer outlook for popular vehicles is a severe shortage starting in a few weeks, especially popular trucks and SUVs. Given that, there will be no need for big factory incentives, and as always, when supplies are short of anything, prices go up.

I canít stress it enough, if you have plans to take advantage of this amazing time to get a new vehicle, do it by May 31 or it will cost you.
Related Articles
Will Hand Sanitizer Blow Up In Your Car?
I carry hand sanitizer in my car and have since the start of the Coronavirus epidemic. Since there is alcohol in it, is there any risk of it causing a fire? The answer is yes, according to a story f... More ›
Itís The End Of The Month And End Of The HUGE Incentives
Youíve heard me talk about the incredible factory incentives that were initiated because of the Coronavirus, yet you still havenít looked at numbers with a Car Pro Certified Dealer? If this is you, y... More ›
Navigating Big Holiday Weekend Car Sales
If thereís one thing that is a given, Labor Day Weekend will be a busy one at car dealerships. Thereís a reason for that of course. The unofficial start to summer is one of the best times of the year ... More ›
The Car Pro Show Salute To Veterans
Memorial Day, an American holiday observed on the last Monday of May, honors men and women who died while serving in the U.S. military. ... More ›
There haven't been any comments left on this blog yet. Be the first to add one!.