Car shortage could change buying behavior forever
Annual auto dealership sell-a-thons have become wait-a-thons for many buyers unable to find the vehicle they want on dealership lots – but that could be about to change as some companies are modernizing the way they sell their cars.
Why is this important: Supply chain disruptions could hold some silver lining for automakers if Americans can be trained to order the exact car they want – color, features, bells and whistles – then wait a month or so. for it to be delivered.
- This is how Europeans have been buying cars since World War II, when money and materials were scarce and factories struggled to recover.
- But Americans have a habit of going to the dealership and driving home in a shiny brand new car.
What is happening: Some companies say they plan to capitalize on the inventory crunch to definitely switch to an order-based system, starting with their new lines of electric vehicles.
- Ford Motor, for example, is trying a build-to-order program with its new Mustang Mach-e, which is in high demand.
- And Ford is offering a rebate of $ 1,000 to customers who pre-order any vehicle.
What they say : “You can’t imagine (…) how much money we are wasting avoiding guessing what our launch mix is for a new product,” Ford CEO Jim Farley told investors and analysts in October. .
- A make-to-order model, he says, is a much more efficient way to run the business.
Between the lines: Packing lots with large numbers of cars, trucks and SUVs represent a huge loss of profits for car dealers and manufacturers.
- The dealers have to cover the cost of financing all those cars that are waiting for a buyer.
- And automakers usually end up producing more cars than necessary, in the hopes of satisfying every customer’s desire. This means more parts, more labor and more costs.
- Inevitably, however, they end up spending more on advertising and incentives to weed out slow sellers.
Yes, but: Automakers have tried to switch to a make-to-order model in the past, with little success.
- “Americans have no patience. We are too impulsive,” said Michelle Krebs, executive analyst at Cox Automotive.
- “Right now we’re in an unusual situation, so people are putting their dibs on,” Krebs explains. That’s not to say it’s a new business model.
it was a hard lesson for newcomers like Polestar, the Swedish electric car maker has split from Volvo, which has had to fine-tune its US strategy.
- He planned to deliver the vehicles ordered by customers to stores, which would not carry any vehicles on their lots.
- But Polestar franchisees found that impatient buyers wouldn’t wait and risk losing sales to their competitors.
- Today, Polestar supplies retailers with five to seven cars for on-time deliveries.
The bottom line: The pandemic has finally made it possible to finalize your online car purchase without ever setting foot in a showroom.
- The big question is whether ordering the exact car you want from the factory is the next step.
Editor’s Note: Cox Automotive’s parent company, Cox Enterprises, is an investor in Axios.