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3 Supply concerns plaguing the auto industry in the US — and how to keep them from impacting the shopping experience

Posted by Meg Bernazzani on April 28, 2021

The Covid pandemic remains top of mind for most Americans as infections continue to spread across the country. However, sales figures indicate that the auto industry is weathering the latest pandemic challenges reasonably well: total vehicle sales surged to 17.7 million in March – 5% higher than pre-pandemic sales numbers in January 2020.

Even with sales moving in the right direction, though, several issues threaten the stability of the new vehicle market in US in the coming months. Since it pays to be prepared, here’s a look at the supply concerns for the US auto industry that are currently making the news.

Microchip shortages are becoming a long-term problem

The global shortage of microchips has become a serious issue for many industries that depend on integrating computing power into their products, including automotive. As a result, the production of new vehicles has been hampered worldwide, the US notwithstanding.

The Detroit Big Three OEMs have been particularly impacted by the shortage. According to data from analyst firm AutoForecast Solutions, Ford Motor Company lost 7,000 units of production in a single week in early April from the company’s Oakville assembly plant, which builds the Ford Edge and Lincoln MKX/Nautilus SUVs. Over that same period, 6,000 units were cut from Stellantis’s Brampton assembly plant, which produces the Dodge Charger and Challenger and the Chrysler 300. The General Motors CAMI facility in Ingersoll, Ont., has been out of commission since February 8, and the automaker recently announced that it will stay down until the week of May 10. On top of this, the production of nearly 24,000 Ford F-Series pick-ups for the North American market was lost over the same period. The F-Series has consistently been a top-selling nameplate in the US and one of the most searched vehicles on CarGurus.

According to industry analysts, the lost units globally are expected to reach into the millions through 2021, and reverberations from the shortage could take the rest of the year to resolve.

Rubber shortages are beginning to emerge

As if the chip shortages weren’t enough of a problem, rubber is now reported to be in increasingly short supply. The combination of a devastating leaf disease, stockpiling by China, and recent global shipping delays such as the blockage in the Suez Canal have caused rubber prices to rise and sent North American auto suppliers scrambling to secure shipments, according to reports by Bloomberg.

Foam shortages threaten car production

The above issues have been further compounded by poor weather in Texas earlier this year. Severe snowstorms caused several manufacturers to temporarily shut down factories, including Ford, Tesla, and General Motors. Similarly, the inclement weather impacted the petrochemical plants needed to supply seating foam for the auto industry. Together, this combination of issues threatens to further derail vehicle production and supply.

Focus on what you can control

Though supply issues might make stocking your lot a challenge for the time being, there’s a lot still within your control. Here are some tips to ensure shoppers choose your dealership:

  • Make sure the inventory you’re showing online matches what you have on your lot. There’s nothing more frustrating for a shopper than visiting the dealership only to find the information online was out of date.
  • Be transparent about pricing at all points along the consumer’s shopping journey. For franchise dealers, that might mean communicating more with OEMs to make sure you have up-to-date offers on rebates and incentives or investing in technology that ties all pertinent pricing data together.
  • Consider beefing up your used car inventory using CarOffer. CarOffer’s Buying Matrix keeps your inventory stocked with the vehicles you want, when you want them, at a price you control. Inventory predictability means dealer profitability.
  • Shorten the transaction time for shoppers. Whether that means letting shoppers complete more of the process online, minimizing time spent in-store, or a combination of both, people don’t want to spend all day at the dealership. In fact, total time spent at the dealership is one of shoppers’ biggest pain points, so make sure you’re not contributing to that pain.

At a time when shoppers might be frustrated by having fewer choices, following these tips could not only help you increase efficiency at your dealership, but also streamline the buying process and elevate customer satisfaction.

Topics: industry insights, industry news, trends