Before the pandemic, Willis Chevrolet Buick in Smyrna typically had about 80 new vehicles on the lot.

In 2021, the number fell to between 40 and 50 most months.

“Today we have five,” said Isaac Willis, executive director and third generation in his family to lead the company.

More than two years into the pandemic, “it’s getting worse instead of better,” Willis said.

He was speaking on July 6 when Delaware U.S. Representative Lisa Blunt Rochester visited the company to get first-hand insight into supply chain issues faced by auto dealers and to talk to them about potential solutions in a new internal bill.

“It affects everyone,” said Blunt Rochester, citing shortages of various products, including masks and hospital equipment at the start of the pandemic, wood and, more recently, infant formula, as well as the lack microchips plaguing the automotive industry.

Blunt Rochester said the House passed the America COMPETES Act to help improve supply chains, and the Senate passed a similar bill, the Americas Innovation and Competition Act. Now she works on a bipartisan committee that negotiates with the Senate to resolve the differences between the two bills.

The main proposals of the House bill are as follows:

  • create a central nationwide point of contact within the Department of Commerce to track supply chains
  • map where problems are in supply chains so attention can be focused on solving them
  • share information with companies on practices to prevent supply chain disruptions
  • encourage more manufacturing in the United States with financial incentives.

“We shouldn’t have to rely on other countries,” Blunt Rochester said. “We need to invest in America. If we can do it here, we should do it here.

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She said supply chain issues cause delays, lead to inflation and jeopardize jobs.

“If you don’t have the microchips that go into the cars, it increases the time it takes to find a car to buy, increases the cost and affects workers if there aren’t as many cars to sell. “, she said.

Supply chain issues have led to fewer jobs at the Willis Chevrolet Buick dealership. Before the pandemic, the company employed about 58 full-time and 20 part-time people. Today, it has 48 full-time and 16 part-time employees.

General Motors, the company that owns Chevrolet and Buick, said about 95,000 vehicles are nearing completion but are waiting for components such as microchips before they can be sent to dealerships, which is expected to happen in the second half.

While there aren’t many choices on most dealership lots, if you order a car, the typical wait time is six months to more than a year, depending on the model, said Willis.

These waiting times vary between brands and different dealerships.

Since new cars are in short supply, people have to keep their old cars running, which fuels the dealership’s repair and maintenance business. After dropping in the spring and summer of 2020 due to coronavirus restrictions and precautions, business has rebounded to pre-pandemic levels.

“Some people put a $5,000 engine in a car that’s only worth $2,500. It doesn’t make sense financially, but you have to have a car, so what else can you do? Willis said.

However, even repair activity was hampered by supply shortages.

“We have no problem fixing the cars. We just need the parts,” Willis said. “We have ordered five engines from GM since January. One is for a city’s police car, so the police department is out of a patrol car while we wait for that engine.

Usually the company has about $225,000 worth of auto parts in stock, but now it only has about $150,000.

Demand and prices remain high

According to a July 5 report from the National Automobile Dealers Association, while inflation and high gas prices are concerns, demand for new vehicles remains strong.

“A bigger impediment to growing auto sales right now still seems to be the industry-wide shortage of cars and trucks, which has led analysts to cut their sales forecasts for the full year,” the NADA report said.

CNBC reported that overall industry sales in the second quarter are expected to decline 19% to 21% from 2021.

“Automakers have been scrambling to replenish dealer inventories that have been hit hard by production cuts amid global shortages of semiconductor chips and other key auto components,” CNBC’s report said.

But Ford denied this prediction.

Ford sales rose 1.8% in the second quarter, with 483,688 new vehicles sold from April to June.

General Motors sold 582,401 vehicles in the quarter, down 15% from 2021.

Toyota recorded 531,105 sales in the second quarter, down 22% from a year ago.

Patrick Manzi, chief economist for the National Automobile Dealers Association, said demand still outstrips supply and lack of inventory continues to be the biggest factor limiting sales.

Car prices are expected to set a record, he said.

The average June transaction price, according to JD Power, will likely total $45,844, a 14.5% increase from the previous June.

“The shortage of microchips continues to limit vehicle production, but that’s not the only obstacle,” Manzi said.

The threat of higher interest rates hangs over the industry.

“The low interest rate environment of the past few years will shift from a tailwind to a headwind as the Federal Reserve continues to raise interest rates in an effort to control inflation,” Manzi said. . “This means that average interest rates for new and used vehicle finance contracts should be back at or above pre-pandemic levels before the end of the summer.”

Tips for shopping for a car during a shortage

If you’re ready for a new car, rather than rolling the dice with a potential clunker, here are some tips to help you succeed.

Can’t get that SUV or pickup? Think car.

Over the past decade, buyers have shifted from traditional cars to SUVs and pickup trucks. This has been a boon for automakers, as trucks generally generate higher profit margins. They can be less complex and less expensive to manufacture than cars, but still come at premium prices.

Buyers looking for a popular midsize SUV are unlikely to get a deal, said Autotrader/KBB editor Brian Moody. Instead, he advises considering a midsize sedan “if you can make it work.

Your GuideNeed a new car? 4th of July deals may fail, but here’s how to outsmart high prices and shortages

Buy the bundle

Rather than trying to order a new car and waiting weeks or months for it to arrive, try buying what’s on the lot at a dealership, Moody’s said. Whenever possible, be prepared to accept colors or options that would not normally be your first choice.

Align funding in advance

With the Federal Reserve raising interest rates to fight inflation, auto finance rates are also rising.

The average rate for a 48-month loan is 4.62% for a new car and 5.18% for a used vehicle, reports Bankrate. Both rates have increased by more than half a percentage point since January.

One way to reduce monthly car payments is to extend the term. In the first quarter, the average new car loan lasted 69.5 months, says Experian.

But perhaps a smarter way, according to Mark Hamrick, senior economic analyst for Bankrate, is to prequalify for a low-interest loan before heading to the dealership to buy a new car to secure the best rate. .

Look at the total cost

Ignore sticker prices for a moment. Car buyers who focus on the price of a new car can miss the big picture, Hamrick warns.

There’s a lot more to the cost of owning a car than just the purchase price. A heavy consumer of gasoline that is expensive to insure and prone to frequent and expensive breakdowns or repairs will drain a bank account faster than just high monthly payments.

Refresh your heels

There is also another obvious alternative: Wait.

As the pandemic recedes, auto factories are increasing capacity and the shortage of semiconductors, which has reduced production, may ease. Then there is the possibility of a recession.

“Given the economic uncertainty, unless someone was really under pressure to buy a vehicle, it would behoove them to wait,” Hamrick said.

USA TODAY’s Chris Woodyard contributed to this story.

Contact reporter Ben Mace at [email protected]


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