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THE Victorian Automobile Dealers Association (VADA) is suggesting to its members that they reach out to their customers, especially those expected to be changing cars in the coming months, to discuss the potential that they may face delays in deliveries for their next vehicle.

Dealers should also be perusing their service customers’ cars and requesting a discussion with those who are potentially coming back into the market during 2021.

The position in Victoria is reflected in the latest Vfacts figures which show sales were down in Victoria in February by 8.7 per cent compared with a national increase of 5.1 per cent.

Savvy Victorian car dealers are now running through their customer databases to alert their owners they should be selecting their next car now because they could be at the end of a very long queue when the time actually comes to changeover to a new car.

The disruption of COVID-19 to vehicle production, a shortage of shipping to Australia, quarantine issues and a shortage of automotive standard computer components is conspiring to leave dealer forecourts increasingly short of stock.

Ships are arriving, but not at the frequency required to meet the 80,000 plus units needed in Australia each month to change over the fleet.

As cars in stock dwindle, dealers are telling customers that just as the COVID-19 fallout has changed the way people work and have business meetings, it has also changed the car-buying paradigm as well.

Sid Cetindag, chair of the VADA, told GoAutoNews Premium that dealers need to be telling their customers: “Gone are the days where you could go in and buy the car on the day. Now it’s pre-order. Most cars are going to be in a pre-ordered situation due to manufacturing constraints around the world.

“Basically, buyers will need to get used to waiting for their car,” he said.

Sid Cetindag

Mr Cetindag’s comments follow the completion of a survey of members on the low levels of stock they are holding. While a lack of excess stock has meant dealers have been receiving healthy margins on cars sold in the past three to six months, stock shortages are now looming.

“This is the new world and the new world is going to be themed around constraints on manufacturing and stock. The message to customers is that if you want a car, you should really get in and put your order in because, unfortunately, until COVID settles down, this is the new world.

“We all need cars, and there are still cars coming in, but they just won’t be coming in as quick as what they have been in the past,” he said.

“We are asking our customers to please understand that cars are still arriving but all these layers of complexities like COVID production delays, shipping capacity to Australia, computer chips and quarantine issues are now causing the supply chain to slow down.

“So while that’s in place, if you want a car, then you’re best to get in, talk to your dealer about the supply chain down the track and pick your car out now. And that way you won’t be disappointed when you’re ready to turn your car over.”

An unexpected issue is a shortage of ships for getting cars to Australia. Dealers are being told that the ships sailing out of Singapore and Thailand normally bound for Australia are beyond capacity.

“They can’t keep up because everything is banked up and they’re not used to having demand for that number of ships coming from those markets to our shores,” one dealer told GoAutoNews Premium.

“The way they explained it to us is: 20 per cent of the ships are normally designated for Australia. Now we need 50 per cent of those ships to be designated to Australia and they just haven’t got them. They are telling us we’ve outgrown our shipping supply,” he said.

There are also reports that stock has been rediverted in transit to other, more profitable right-hand drive markets.

Wayne Pearson

The supply of used cars is also drying up as the new car sales that generate used car availability get delayed. Fleet leasing companies are extending finance coverage on cars where owners are still waiting for the replacements to become available and this is further drying up the supply of ex-business vehicles.

The VADA survey suggested that the stock position is worse in Victoria with stock being diverted to other states due to the recent snap five-day lockdown imposed by Daniel Andrews.

GoAutoNews Premium has been told that vehicles that used to take two to three weeks for delivery are now taking seven to 10 weeks and longer for some models.

Dealers reported that some Toyota models have five-month delays. Isuzu Ute dealers are experiencing similar delays. Kia, Ford, Subaru, Mitsubishi, Suzuki, Jeep, Nissan and Mazda dealers are said to be experiencing similar delays to Toyota.

In the meantime, dealers are looking to their OEMs for guidance on when stock will arrive. GoAutoNews Premium has been told that some low-volume specialist models could be running as far as 10 months behind supply.

Many factories have told dealers that every car has to be on forward order.

Hybrids are proving to be especially hard to get because they are affected by raw materials supply and pricing which is making their manufacture cost prohibitive.

The semiconductor-chip shortage is rearing its head as well with 28 per cent of respondents putting the delay or part of the shortage down to the ongoing semiconductor-chip issue .

In the agricultural sector, Kubota, Massey Ferguson, New Holland and CLAAS are increasingly tight. Ag sales have been influenced by a good season for farmers with a better season predicted to follow plus the positive impact of the instant Asset Write-off.

In motorcycles; Honda, Husqvarna, Yamaha and Royal Enfield are very tight, but have stock.

Steve Zanlunghi

Wayne Pearson, who has been appointed a consultant at Pitcher Partners Motor Industry Services said that he expected supply would be back to normal in the third quarter.

“Most of the dealers I know are starting to see a lot more stock flowing now and are delivering their order banks,” he said.

“Definitely contacting customers on a shortage of supply is great practice as a call to action, with the aim of getting them into the dealership and possibly selling them something in stock.”

But Mr Pearson warned dealers that “getting them in, just to place an order” isn’t necessarily good practice.

“Many customers place orders at five different dealerships in the hope one gets the car early. You can’t take orders to the bank and often a dealer’s order bank evaporates once supply arrives. In practice I have found (for a bread and butter car) that any order over two months old would most likely fall over because the customer has bought something else from someone else.

“It is important to be really staying close to customers with orders placed to ensure they will consummate once the car arrives. Dealers with quality CRM processes would be very much on top of that. So if they are doing quarterly date of future upgrade calls with their customers as well as 72-hour post service follow up calls, this process should be happening,” Mr Pearson said.

Steve Zanlunghi, director of operations – Asia Pacific Region for Absolute Results Productions, a company that specialises in training sales staff to make appointments with prospective buyers on dealership databases, told GoAutoNews Premium: “We have been engaged by multiple forward thinking dealers and dealer groups, not just in Victoria, but across Australia over the past few months.

“We are seeing that these clients are engaging us for two main reasons. One is that they realise the grosses are really good at the moment and that once the supply in this country starts to be replenished that the ability to hold gross at the current levels may not be there.

“The other reason is to generate used car stock due to the fact that we can be very surgical in targeting individuals with a high propensity to buy, down to the specific models, within their database that can be turned quickly and profitably,” Mr Zanlunghi said.

By John Mellor

Kelley Blue Book
Branded Financial