By Desiree Homer
As consumers make their way back to the showroom floors nationwide, some dealers are anticipating an interesting summer. In the truck market, those buyers who farm, ranch, work, and haul are finding fewer models from which to choose, especially from General Motors. The temporary stall in production at the manufacturer level means shortages in almost all models. But the pickup industry segment is feeling the drought even harder than others.
Trucks Are Still Increasingly Popular
COVID-19 may have stalled the car buying for a bit, but it certainly didn’t have an effect on the popularity of midsize and full-size pickups. In a recent Dealer News Today podcast, Zo Rahim, Manager of Economics & Industry Insights with Cox Automotive, tells Dave Cantin, “demand never went to zero.” And he’s right. According to J.D. Power, sales of new trucks outperformed the market in the first week of June. Total retail sales were still behind by about 12%, but large and midsize pickup sales both increased by 5%. The popularity of these models may have been prompted early on by seven-year loans and zero-interest incentives. But those perks for larger and light-duty models are no longer being made available to buyers.
Affected by More than the Pandemic
Fernando Varela owns three Ford dealerships and a General Motors store with four brands in Texas. He shares that he is experiencing about a 20% shortage of light-duty GM trucks and about a 5% shortage with his new Ford truck inventory. These deficits are due to the automakers having shuttered their production lines in March and April, because of Coronavirus. Varela predicts the shortages to continue, despite factory facility restarts. Other truck dealers are citing other concerns. Tom Castriota, dealer principal for Castriota Chevrolet in Florida, says light-duty truck inventory really hadn’t rebounded from the UAW strike against General Motors last September and October. The strike lasted 40 days, and to Castriota, it feels like a “double whammy, so to speak.”
Creative Problem-Solving Efforts
Fernando Varela said he had stocked up on new pickup inventory early this year and it’s paying off for him now, in Texas. In Florida, Tom Castriota is supplementing his local demand for trucks by selling customers on his used models instead. In his case, he’s been able to move a high number of Chevy Colorado and Silverado trucks last month. The lack of truck inventory is going to present a problem for many markets, and Mark Wakefield of AlixPartners says it can feel “like a crisis to a dealer.” Truck buyers tend to be precise about what features they need in a pickup for work and recreation. Dealers may not be able to have the right truck for some buyers today, but Wakefield predicts this shortage will be short-lived. Getting creative with the inventory you have may be the key to connecting to those truck enthusiasts ready to buy now.
The next 30, 60, and 90 days will be telling as the big three automakers are full steam ahead with production. Trucks remain a hot commodity for customers, and dealers are doing everything they can to meet the demand.