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U.S. Dealers Are Asking For More Inventory

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On: Tue, Aug 24, 2010 at 9:38AM | By: Sherry Christiansen

U.S. Dealers Are Asking For More Inventory

We have heard the woes of dealers across the country complaining about lack of stock and lost sales, every since automakers cut production as a result of last years’ stalemate of new car sales affecting every automaker in the U.S. market.  Stories about dealers such as Carter Myers who reports that he is losing motivated buyers over lack of products such as the Terrain crossover, Honda Pilots and Sonatos, and Chevy Suburbans, to name a few.

Automakers "have driven supplies too low,"  according to Myers, a former chairman of the National Automobile Dealers Association.

It is a perplexing issue across the industry.  While most dealerships in the industry suffer from low sales these days, many dealers feel they could definitely sell more vehicles if automakers would supply them. There are a handful of difficult-to-get vehicles, such as the Terrain, which accounts for much of the problem. Many of the complaints are from General Motors Co., Ford Motor Co. and Chrysler Group dealers.

73% of the 244 dealers interviewed in an Automotive News survey last week, agreed that they had too few new vehicles in inventory. And 77% of those respondents felt that they had lost sales as a result.

Automakers report that they are doing their best to keep dealerships stocked with inventory while avoiding the past mistake of over production that resulted in too much inventory on the lots, driving prices and resell values down and high incentives up.

The company has been increasing production to meet demand and “relieve shortages of hot vehicles such as the Chevrolet Equinox and Terrain Crossover,” according to a GM spokesperson.

The plant in Ontario that builds the Terrain is reportedly “maxed out.” GM is doing its best to ship refitted portions to Oshawa assembly plant outside of Toronto for finishing in order to supply more of the crossovers by fall.

Paul Benton, owner of Chevrolet-Cadillac in North Carolina, agrees that he wants to avoid massive inventories, as do most dealers. But Benton says that he would have sold as many as 20% more new vehicles if he had had adequate inventory over the past 3 months- which would increase his sales by 5 additional vehicles per month.

According to Automotive News.com; Benton does not have one single Equinox on his lot. He explains that trucks are in high demand in his sales region, but he has only 5 Chevrolet Silverado Trucks on hand, compared with a typical 30 before the GM bankruptcy. According to Benton, it makes sense to stock more vehicles for American made trucks vs Toyota or Honda because; “pickups, for example, have multiple cab configurations, different engines, varying beds and other attributes that customers want to experience firsthand.”

Toyota Motor Sales U.S.A. and Honda Motor Co. commonly operate with lean inventories in the United States, generally less than a 50-day supply.

Auto dealer Tom Durant states that he needs to learn how to suffice with lower inventory. Durant agrees with automakers that it is easier for customers to choose from 10 models vs. 40, but he needs to know which 10 are the right models to order for his particular market.

"We’re having to learn to order cars again," said Durant, whose holdings include Classic Chevrolet in Grapevine, Texas, and Mike Brown Ford-Dodge-Chrysler in Granbury, Texas. Durant said he expects Detroit automakers to increase production in order to help to eliminate deficiencies of stock by the 4th quarter this year.

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