Autonation Says Half of the Cars Arriving at Dealers Are Already Sold

Autonation Says Half of the Vehicles Arriving at Sellers Are Already Bought

The tight provides of latest and used vehicles which have damped auto gross sales and pushed costs greater haven’t eased and are prone to linger properly into this yr, based on AutoNation, the nation’s largest automotive retailer.

Half of all new Chevrolets, Fords, Toyotas and different main manufacturers arriving on vendor heaps within the subsequent 90 days are already bought, AutoNation stated. The market is even tighter for luxurious vehicles: Practically three out of 4 of these vehicles arriving at sellers within the subsequent three months can be “pre-sold” — that means a buyer has paid a deposit and is ready to purchase the automobile as quickly because it arrives.

“This tight-inventory state of affairs goes to be round definitely by the primary half,” stated AutoNation’s chief executive, Mike Manley. “I’m hoping we do see some enchancment within the second half.”

Promoting vehicles earlier than they arrive from the meeting plant is a considerable change from the standard trade follow of stocking sellers with tons of and even 1000’s of autos that may sit for months earlier than they’re bought. It additionally means automakers could have a protracted street to restocking vendor heaps with new autos.

The scarcity stems from the early days of the pandemic, in 2020, when auto vegetation shut down for almost two months. The issue was compounded by a scarcity of laptop chips, which has compelled producers during the last 12 months to idle vegetation quickly for weeks at a time.

The tight provide has enabled sellers to promote vehicles at their full listing worth, or much more.

These greater costs helped AutoNation reap document earnings within the ultimate quarter of 2021, the corporate stated Thursday. The corporate reported a revenue of $387 million, greater than double from the identical interval in 2020. Income rose 14 %, to $6.6 billion.

The leap in revenue got here regardless of a 20 % decline in sale of latest vehicles, to 57,601, a mirrored image of the upper costs. Gross sales of used vehicles, costs of which have additionally risen considerably, elevated 21 % to 74,442.

Mr. Manley stated it was tough to forecast whether or not AutoNation may maintain such excessive revenue ranges this yr. The provision of autos and the possibilities of rising new-vehicle gross sales relies upon closely on whether or not the pc chip scarcity improves, as automakers are hoping. The Federal Reserve has additionally indicated that it’s prone to increase rates of interest, which might enhance the price of financing car purchases.

“The profitability that we’ve been in a position to develop places us in place,” he stated. “However one factor I don’t need to predict is what’s going to occur within the full trade as a result of you may have plenty of shifting items.”

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