“The pipeline is very dry,” said Mike Maroone, CEO of Maroone USA, which operates five stores in Colorado and one in Florida. Maroone’s stores have only a 30-day supply of their top-selling Chevrolet Silverado.
“That is a problem for us,” he said.
Pickup inventory at General Motors dealerships was already slimmer than usual in the aftermath of the 40-day UAW strike last fall, but Ram dealers also are feeling inventory pressure. GM and Ram have been particularly aggressive with incentives since the coronavirus crisis began.
With North American auto plants closed since mid-March to protect workers from contracting COVID-19, the most sought-after vehicles have become tough to find. Some dealers say they are starting to run short on full-size pickups as a result of the generous financing offers rolled out as the coronavirus pandemic torpedoed the economy.
Because of the industrywide shutdown, light-duty pickup inventory in the U.S. could fall to 400,000 by the end of this month and plunge to 260,000 by midyear, according to J.D. Power. That’s compared with an inventory of more than 700,000 in May and June of last year.
“The key is to get factories open and start running light-truck plants (pickups, crossovers, SUVs) at three shifts a day because once the virus abates, high days’ supply figures won’t matter; it will be unit levels that will,” Morningstar said in a report in April.
The 0 percent, 84-month offers the Detroit 3 started in March have been incredibly effective, even as unemployment continues to rise.
More than a quarter of financed new-vehicle deals in April involved no-interest loans, according to Edmunds, up from just 4.7 percent of March transactions. And not only did 81 percent of April auto loans have terms of 67 to 84 months, but the average monthly payment and amount financed increased at the same time.
The shutdown feels familiar to GM dealers who last fall had to put orders on hold during the strike.
“It’s very similar, except coming into the UAW strike, we had adequate inventory,” Maroone said. “Coming into this disruption, we had not yet recovered from the strike. We’ve been taking active allocations, but they’re just stuck in the system right now.”
Silverado inventories averaged 82 days’ worth in March, compared with 120 a year earlier, according to Morningstar’s report, which cited Ward’s Intelligence data. Ram pickup supplies fell to 114 days from 134. Ford, which has limited 0-for-84 financing offers to 2019 models, went the opposite direction with the F-Series, as days’ supply rose to 111 in March from 84 a year earlier. But if the shutdown continues much longer, Ford dealers say they, too, could feel a strain during the summer months.
“The key question,” said Steve Kalafer, CEO of Flemington Car & Truck Country in New Jersey, “is when the gates open, how quickly can they get them to us? Customers want selection. They don’t want to settle for something.”