Photo: J.E. Cornwell, owner of KCRVs in Grandview, says he has trouble keeping up with the demand for RVs. Photo by Kathy Feist
During the pandemic, the auto industry experiences a topsy turvy world of supply and demand
By Kathy Feist
There is very little the coronovirus has not changed, and the auto industry is one of them.
The industry is seeing an increase in demand for used cars, recreational vehicles, and off-road vehicles, while also experiencing a shortage at the factory for new vehicles and parts.
New car inventory was down 33% in the second quarter, which ended in June. At least part of that time period included pandemic shutdowns at the factories during March and April, creating a shortage in supply to auto dealerships. New car sales followed suit: down 33% in the second quarter according to the Bureau of Economic Analysis.
“The pandemic has thrown a wrench into everyone’s plan,” says Bobby Sight, Operations Director at Rob Sight Ford. “We are super low on inventory, the lowest we’ve ever been,” he says. “We’ve got to have them to sell them.”
Cars have begun trickling back in, according to Sight. Ford manufacturing plants began catching up this month by adding extra shifts and working through the summer, normally an off time.
Some dealerships claim an uptick in sales after reopening.
“We are doing pretty well,” says Jim Seaman, marketing manager for Molle Toyota. The dealership reopened its showroom on May 15. “Our sales beat May and June of last year,” he says. He attributes it to the Molle reputation.
During the spring, the auto industry began offering incentives, such as rebates and low or no interest financing over a long time period. As these deals begin to dry up and factories try to compensate for lack of production, the outlook for 2020 is expected to be a 22% decrease in sales overall, according to CFRA Research analysts.
As one might imagine, with a shortage of new cars, buyers have begun purchasing used cars. Additionally, drivers are holding on to their cars longer, as they wait for new cars, creating a lack of trade-ins, or used cars.
“It’s terrible,” says Patrick Forsythe, general manager at Midwest Autopark in Martin City. “When people don’t trade in cars, then we don’t have any to buy.” His business is down 40% compared to last year.
Ken Zaarl, owner of Unlimited Auto Sales at 84th and Wornall, attributes the shortage of used cars to banks not repossessing vehicles during the pandemic. “Used cars are hard to come by,” he says. “Now we have to pay more for them.”
He says there has been a 30 to 40% increase in wholesale prices since the pandemic started.
This cost increase is passed down to the consumer. But while it’s a horrible time to buy a car, it’s a great time to sell an extra car. It’s a seller’s market.
Recreation vehicle and mobile home sales have a similar story but with a slight twist. Yes, all factories shut down during the months of March and April, creating a supply shortage. But the desire to go on a family vacation while maintaining social distancing has driven demand for RV sales.
“It’s crazy!” says J.E. Cornwell, who opened KCRVs in Grandview in November. “We cannot keep up with inventory.”
According to analysts, demand for mid-range priced motor homes increased by 90% in June over last year, according to the RV Industry Association. First time buyers increased by 40%.
While Cornwell waits for new RVs, he relies on consignments, which also move quickly. “We got one in last week, and an offer was made before we even got it cleaned,” he says.
Cornwell also looks ahead to the very near future. “During the regular year, there isn’t enough RV storage space,” he says. He predicts an even bigger problem this year. As a result, he is providing secured storage space with amenities behind his dealership.
There has been an unprecedented demand for off-road vehicles, such as ATVs, motorcycles, scooters, electric bikes and watercraft. The industry has seen a 19% increase in new sales, according to MIC’s Retail Sales Reportinig system. Like RV sales, the demand is related to fun ways to safe distance.
“The product fits well with staycations,” says Steve Okenfuss, owner of Reno’s Powersports in Martin City. “And people have more time to ride.”
Okenfuss says his business has been slammed. “Sales are ahead of last year,” he says.
The automobile service industry has also taken a hit. With fewer miles driven on a car, the fewer repairs are needed.
“It’s not been easy, but we are working through it,” says Noah Brown at Cable-Dahmer Collision Center in Martin City. He attributes the lack of autobody work to fewer people out on the road.
In addition, the service industry must also deal with the shortage in parts supply due to factory closings earlier in the year.