Ford wants more online, made-to-order sales. What does that mean for dealerships?
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There’s a pickup-truck sized hole in the disappointing retail sales numbers the U.S. Commerce Department reported Tuesday. That ongoing new and used car shortage – spurred by that ongoing semiconductor shortage – led to a 4% drop in dealership sales last month.
Some automakers are leaning into the changes caused by the chip shortage and pandemic. Ford recently announced it wants to permanently reduce the number of cars waiting on dealership lots and shift more of its business to online made-to-order sales. That could be a mixed bag for both dealerships and consumers.
Before COVID, if you couldn’t find that paprika-red Ford Fiesta hatchback you just had to have, Varsity Ford in Ann Arbor Michigan probably had you covered.
“We were known for having large inventory,” said general manager Matt Stanford, who said now he’s only got 50 new vehicles on the lot. No wonder more than 90% of his sales are online orders.
If Ford cuts down his inventory permanently, he says he’ll shift to other revenue streams.
“We’ll bolster our pre-owned inventory, service department, our collision center, our parts center,” he said.
Large inventories are usually a gamble for dealerships, who pay automakers up front for vehicles. But it’s also a risk to make buyers wait a month or two for an online order, says Edmunds’ Jessica Caldwell.
“Americans like things now. So, this idea of ordering, while it sounds really great in theory, we’re just not culturally used to it,” she said.
For antsy buyers, a smaller Ford inventory could be a boon for a Chrysler or Toyota dealership down the street.
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