Car dealerships short on cars, going big on prices
Car dealerships short on cars, going big on prices
Theo Ebert looked out at his empty new car lot in Woodland Hills, in the Los Angeles area.
“There’s typically three rows [of cars] where we’re standing,” said Ebert, the sales manager at Vista Ford Lincoln. “Right now, we’ve got — what — five cars we’re staring at?”
This dealership normally stocks around 500 to 600 cars this time of year, he said. But at this time, the total inventory was just 100, including those five lonely cars in the middle of the sales lot.
Even so, business is booming, leading to sky-high prices on new and used cars. There have even been bidding wars for cars that don’t have to be pre-ordered. “Whoever wants to pay the most for the car gets the car,” he said.
The global supply chain issues stretching many business owners to their breaking points have actually been a boon for some car dealerships across Southern California. Ebert said his dealership is running with lower overhead and fewer employees while demand, on the other time, is at an all-time high.
“We’re making more money on less cars,” Ebert said. “Anyone that’s in the car business that says they’re not having a record year is probably lying to you.”
Business is especially good for some of the car market’s hottest cars, such as the new Ford Bronco. Ebert said those cars can sell for $30,000 to $40,000 over asking price in some instances.
“So, a $60,000 Bronco can sell for $100,000,” he said.
Those markups are good for car dealerships but the exact opposite for car shoppers like Zoe Rosenberg, who is in the market for a new lease in the Los Angeles area. She turned in her Toyota this past summer and has held off on getting a new car.
“I was thinking about upgrading a bit, so I went to Lexus in August,” said Rosenberg, a freelance TV and film producer. “At the time, prices seemed about normal.”
But when she went back to check out the same car in November, “the lease price was $200 more for the same car,” she said.
So when is this going to stop?
“Maybe it’s not going to be until 2023, where we start seeing some return to a more supply/demand balance,” said Brian Matas, the vice president of market research at IC Insights. Many car manufacturers canceled computer chip orders early in the pandemic, he said.
With demand now rising, Matas said it’s simply taking a lot of time to catch up.
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