Before the pandemic, Willis Chevrolet Buick in Smyrna typically had about 80 new vehicles on the lot.
In 2021, the number has dropped to between 40 and 50 most months.
“Today we have five,” said Isaac Willis, the CEO and the third generation of his family to run the business.
More than two years into the pandemic, “it’s getting worse instead of better,” Willis said.
He was speaking on July 6 when Delaware’s US Representative Lisa Blunt Rochester toured the business to get first-hand insight into the supply chain issues auto dealers are experiencing and to educate them on potential solutions in a new House bill.
“This affects everyone,” Blunt Rochester said, citing shortages of a variety of products including masks and hospital equipment at the start of the pandemic, lumber and, more recently, baby formula, along with a lack of microchips plaguing the population. Automotive industry.
Blunt Rochester said the House has passed the America COMPETES Act in an effort to help improve supply chains, and the Senate has passed a similar bill, the US Competition and Innovation Act. It is now working in committee. bipartisan committee negotiating with the Senate to resolve the differences between the two bills.
The main proposals of the House bill are:
“We shouldn’t have to rely on other countries,” said Blunt Rochester. “We need to invest in the United States. If we can do it here, we should do it here.”
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She said supply chain problems cause delays, lead to inflation and jeopardize jobs.
“If you don’t have the microchips that go into the cars, that 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,” he 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 workers. Now, he has 48 full-time and 16 part-time.
General Motors, the company that owns Chevrolet and Buick, reported that about 95,000 vehicles are near completion but await components such as microchips before they can be shipped to dealers, which is expected to happen in the second half of the year.
While there isn’t much to choose from on most dealership lots, if you order a car, the typical wait time is anywhere from six months to more than a year, depending on the model, Willis said.
Since new cars are in short supply, people need to keep their old cars running, and that fuels the dealership’s repair and maintenance business. After dipping in the spring and summer of 2020 due to coronavirus restrictions and precautions, business recovered to pre-pandemic levels.
However, even the repair business has been curtailed by a shortage of supplies.
“We have no problem fixing cars. We just need the parts,” Willis said. “We have ordered five engines from GM since January. One is for a city police car, so the police department meets a patrol car while we wait for that engine.”
The company typically has about $225,000 worth of auto parts in inventory, but now it only has about $150,000.
According to a July 5 report from the National Association of Automobile Dealers, while inflation and high gas prices are cause for concern, demand for new vehicles remains strong.
“A major impediment to rising auto sales today still appears to be an industry-wide shortage of cars and trucks, prompting analysts to cut their full-year sales forecasts,” the report said. ANY.
CNBC reported that overall industry sales in the second quarter are forecast to decline between 19% and 21% from 2021.
“Automakers have been scrambling to rebuild dealer inventories that have been hit hard by production cuts amid a global shortage of semiconductor chips and other key automotive components,” the CNBC report said.
But Ford defied that prediction.
Ford sales increased 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, a 15% decrease from 2021.
Toyota reported 531,105 sales in the second quarter, down 22% from last year.
Patrick Manzi, chief economist at the National Automobile Dealers Association, said demand continues to outstrip supply and lack of inventory remains the main 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.
“Microchip shortages continue to limit vehicle production, but it’s not the only hurdle,” Manzi said.
The threat of rising interest rates hangs over the industry.
“The low interest rate environment of the last several years will turn 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 return to or above pre-pandemic levels before the end of the summer.”
If you’re determined to buy a new car, rather than roll the dice with a potential clunker, here are some tips to help you succeed.
Can’t get that SUV or truck? Think car.
Over the past decade, buyers have shifted their allegiance from traditional cars to SUVs and trucks. It has been a boon to automakers, as trucks typically have higher profit margins. They can be less complex and expensive to manufacture than cars and still command high prices.
Buyers looking for a popular midsize SUV are unlikely to get a deal, said Brian Moody, executive editor of Autotrader/KBB. Instead, he advises considering a midsize sedan “if you can make that work.”
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buy the lot
Instead of trying to order a new car and waiting weeks or months for it to arrive, try buying what’s on the dealer lot, Moody said. As much as possible, be willing to accept colors or options that would not normally be your first choice.
Line up financing up front
With the Federal Reserve raising interest rates to combat inflation, auto financing rates are rising as well.
The average rate for a 48-month loan has been 4.62% for a new car and 5.18% for a used vehicle, reports Bankrate. Both rates have risen more than half a percentage point since January.
But perhaps a smarter way, according to Mark Hamrick, senior economic analyst at Bankrate, is to prequalify for a lower-interest loan before you go to the dealership to buy a new car to secure the best rate.
Look at the total cost
Ignore the sticker prices for a moment. Car buyers with a laser focus on the price of a new car may be missing the big picture, Hamrick warns.
There is much more that goes into the cost of owning a car than just the purchase price. A gas guzzler that is expensive to insure and prone to frequent and costly breakdowns or repairs will drain a bank account faster than just a hefty monthly payment.
refresh your heels
There is also another obvious alternative: wait.
With the pandemic receding, auto plants are ramping up capacity and a shortage of semiconductors, which has hit production, could ease. Then there is the distinct possibility of a recession.
“Given the economic uncertainty, unless someone is really under pressure to buy a vehicle, they’d be better off waiting,” Hamrick said.
USA TODAY’s Chris Woodyard contributed to this story.
Contact reporter Ben Mace at firstname.lastname@example.org.
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