Post by account_disabled on Feb 27, 2024 7:05:38 GMT
Car companies have a new way to keep prices high : limiting options at dealerships. Since recovering from COVID-related factory closures and a prolonged shortage of chips needed for today's tech cars, companies like Ford , General Motors and Stellantis have finally seen more cars arrive in dealerships . According to Deutsche Bank analysts, at the end of March there were 63, 47 and 69 days of vehicle inventory at dealerships, respectively, a figure much higher than the industry average, which is 35 days . The price of electric cars is closer than ever to that of gasoline cars... because the cost of combustion cars continues to grow But now, automakers want to keep options slim for buyers and are rushing to counteract that inventory buildup in order to keep profits rising . "Some companies are trying to proactively manage inventory levels with planned shutdowns, as seen with GM's Fort Wayne and Silao production plants ," Deutsche Bank analysts note. This is especially abnormal in the American automobile industry. Automakers used to prioritize volume and market share, but now they're trading both for profit.
What buyers face During the height of the pandemic, car companies and dealers couldn't get their hands on enough cars due to supply constraints such as chip shortages . But they became accustomed to selling vehicles at high prices with minimal inventory on their lots. "The COVID experience showed both automakers and dealers Oman WhatsApp Number the benefits associated with higher margins and reduced sales," Karl Brauer, executive analyst at iSeeCars.com, told Business Insider . "I suspect they have realized that having fewer buyers with money has its advantages , at least in the short term." Now, as more inventory hits the market as the industry recovers from the chip crisis and consumer demand wanes amid macroeconomic concerns, intentionally closing factories for short periods of time could be a way to limit how many vehicles are waiting (and therefore limiting the real estate dealers have to pay for). It could also convey the message that buyers' options are somewhat limited.
We've also seen many base trims cancelled, and I'm seeing less effort put into the annual upgrades a given model receives to continue attracting new buyers," says Brauer. "I think the attitude is that demand is strong enough to not sell lower-margin entry-level models and not spend as much on improving cars year after year. All of this saves automakers money while increasing margins. " . It's true: Although inventory levels have risen markedly in recent months, the average transaction price for new cars has remained relatively high, reaching $48,008 in March , according to Kelley Blue Book. Buyers should not always be fooled by lack of stock Ultimately, automakers want to put profits first and that means purchasing will never return to normal. "Prior to the pandemic, many automakers were overly focused on filling production capacity, building as many units as they could, and in doing so, they often built more vehicles than the market really wanted ," notes Ed Kim, president and CEO.