March 8, 2022
2021 was certainly a year used car dealerships will remember. Semiconductor shortages, low inventories, high values, and supply chain issues were just some of the major challenges this year, all of which pushed dealers to find new ways to effectively source and sell their pre-owned vehicles.
While some dealerships were able to make the most of the situation and evolve their traditional buying and selling strategies to accommodate current market conditions, others felt they were too behind the ball in implementing a buy/sell strategy and digital retail offering.
But here we are with a fresh start to a new year and 2022 seems to be kicking off with everything under control. Ok, wishful thinking, but there’s reason to believe that blue skies are ahead for the auto industry. That doesn't mean the future is risk-free. It’s true that consumer demand is still high and OEMs and parts suppliers are realizing that the need to navigate shortage challenges is a long-term play, not a quick fix. But these positive signs don’t necessarily make increased sales a sure thing.
Considering how much uncertainty there is surrounding the auto industry as we head into 2022, how can dealerships prepare to make this year a memorable one for all the right reasons? Let’s consider what the future holds for the automotive industry in the coming year, and how we can expect these trends to impact the ability to effectively manage dealership inventory.
Addressing the Microchip Shortage
Flash back to September 2020 and the global microchip shortage was a major talking point in the mainstream media - and the story remains the same today. Some experts believe the shortage could last well into 2023, which means dealers will need to continue embracing innovative operational processes that expand their buying reach and streamline their ability to effectively manage dealership inventory.
As September of this year drew to a close, fewer than a million vehicles were available for sale — a record low. The average listing price also set a new record, surpassing $43,000, according to a Cox Automotive analysis of vAuto Available Inventory data. Even as microchip production begins to ramp back up, we can expect to feel the ripple effect of supply chain issues well into 2022 and beyond.
Naturally, low dealership inventory means fewer cars being sold. Down the road, there will be fewer cars coming off leases, in addition to minimal opportunities for dealerships to court trade-ins and negotiate buy-back offers. Lease turn-ins work to stabilize the peaks and valleys of used car supplies, so without them, dealers will need to generate new buying opportunities that will sustain their sales pipeline.
Even as car manufacturers like Toyota begin to bust out of the microchip shortage and produce more vehicles, dealerships shouldn’t expect everything to quickly return to business as usual.
The Issue of Inventory Transportation
Let’s say things pan out perfectly and the microchip shortage ends within the next year. As new car production starts to ramp back up, dealers will soon find themselves grappling with a different type of shortage — truck drivers.
The Great Resignation has seen many professionals calling it quits on their current positions, truck drivers included. Whether it’s a result of long hours, poor work conditions, insufficient pay, or early retirement, it’s estimated that about 1,200 current drivers are exiting the industry every week.
Fewer truck drivers on the road result in dealerships having to wait longer to bring inventory onto their lot. The problem will no longer be around car production, but instead around car transportation.
Increasing your dealership inventory every month will require you to burst your geographical buying bubble and, in turn, expand your inventory reach. Establishing reliable buying strategies means taking the time to consider alternative sourcing strategies that your dealership has yet to explore. Be prepared to embrace innovation in the new year and beyond.
CarOffer: Navigate the Future with Certainty
Managing dealership inventory with greater control and efficiency is made much easier when you have dedicated experts and industry-leading technologies in your corner. No one can say for certain what 2022 has in store for the auto industry, but CarOffer is committed to ensuring dealerships are able to remain agile and competitive, regardless of market conditions.
As the auto industry's first instant trade platform, we’ve enabled 7,000+ dealerships to source and sell pre-owned vehicles nationwide. Throughout the pandemic, we helped dealers embrace innovative buying and selling strategies that relied on data-driven insights and streamlined processes to minimize sunken costs and maximize revenue.
Together, we can work to ensure your dealership is equipped to handle whatever 2022 has in store. Take CarOffer for a test drive to see how our dealership inventory solutions can serve you.
