It has been suggested that supply levels in the car industry will never go back to the levels they were once at, even if manufacturing of components like semi-conductors pick up and their allocation to car makers is free-flowing.
Importantly, this isn’t down to technical supply chain issues but more to do with customers and their capacity to wait. The science tells us that it takes anywhere from 18 to 254 days to change a habit, and perhaps the delays customers have experienced on new cars over the past two years or so have simply created a new habit and a fresh belief that extended waiting is part of the process.
Business website, Insider, published the bold headline, Car buying is never going back to normal. One immediate thing to note is that this is a statement rather then a question.
As you can see from our write up, we’re not so sure.
However, Insider does deliver some impactful sources to strengthen the claim.
"We will never go back to the inventory levels that we were in the past," GM CEO Mary Barra told analysts in a Wolfe Research conference last February. Execs at Ford and Stellantis (the Detroit-based parent company of Fiat Chrysler and PSA Group) have expressed similar views in the past few months.”
On the ground stock levels in the US are clearly dropping, and the article is suggesting that car makers are now looking at how they can benefit from shorter supply now that buyers have adapted to the trends set by the pandemic and chip shortages.
The article, continues:
"The domestic brands have a 30-40 day supply, which is still very, very low compared to historic levels," said Zack Krelle, industry analyst at TrueCar.
"It's certainly better than it was a year ago," Krelle added, "but nowhere to the level of abundance that it used to be."
Here in the UK there is little doubt that the supply challenges have followed retailers into 2023. AutoBuzz data shows the length of time customers are waiting for their cars is increasing and although it varies from brand to brand and model to model, the wait is real and currently refusing to budge.
But, on new cars especially, hasn’t it always been there?
Wouldn’t it be a great shift in mindset from retailers to stop seeing this as a problem that will go away and instead an opportunity that has presented itself out of a pretty ugly situation?
Whether the US angle is correct or not, very few would disagree that car buying is an ever-changing process that requires retailers to adapt and shift with it.
Car buying is never going back to normal is undoubtedly a headline riddled with problems, questions and hidden messages. Yet, if it pushes franchised dealer groups to re-evaluate how they handle customers in the buying journey, in particular those in the ever-growing order to handover space, maybe this shock to the system is the required tonic to make the very best of 2023.
Want to find out more, hear about how our automotive clients are using the platform or simply see a demo for yourself? Click here to Get in Touch, we’d be happy to have a conversation and have you set up on AutoBuzz this year!
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