From Too Many To Not Enough 2020 Pickups-What Happened?
Just to show how unpredictable selling vehicles have become during the coronavirus crisis last month car companies were fearful there would be a glut of pickups. In response, dealers offered no-interest seven-year loans. That ended up working out great. In fact, it worked so well that this month the opposite concerns are surfacing. Now dealerships are fearful they’ll run out of pickups. Both GM and Ram are experiencing depleted pickup truck supplies as a result of aggressive incentives. The incentives were an effort to keep the iron moving and that’s exactly what the results were. From too many to not enough 2020 pickups; what happened?
Last year pickup inventories were 700,000, now they could drop to 260,000 by June
Last year pickup truck inventories were around 700,000 in May and June according to Automotive News. This year truck inventories could fall to 400,000 by the end of May and continue dropping to 260,000 by June according to JD Power.
“The key is to get factories open and start running light-truck plants (pickups, crossovers, SUVs) at three shifts a day because once the virus abates, high days’ supply figures won’t matter; it will be unit levels that will,” Morningstar reported back in April. April sales found 25% of sales involved no-interest financing which had been less than 5% in March.
Over 80% of loans in April were 67-84 months, with both higher monthly payments and amounts
What’s more troubling is that over 80% of loans in April were between 67-84 months duration. And still, monthly payments were also higher as were the amounts financed.
In Denver Maroone Chevrolet has only a 30-day supply of Silverados. “The pipeline is dry, and that’s a problem for us,” said CEO Mike Maroone to Automotive News. He said his five dealerships went through a similar experience during the GM UAW strike last September. “It’s very similar, except coming into the UAW strike we had adequate inventory,” Maroone said. “Coming into this disruption we had not yet recovered from the strike. We’ve been taking active allocations but they’re just stuck in the system right now.”
“Customers want selection, they don’t want to settle for something”
There are normally a large variety of pickups because there are so many different needs. Also, traditionally pickups come in a wide range of models for many different budgets. “The key question is when the gates open, how quickly can they get them to us,” said Steve Kalafer, CEO of Flemington Car & Truck Country in New Jersey. “Customers want selection. They don’t want to settle for something.”
“Sold orders are going to get more predominant as people come in and they want a certain truck, and it’s not out there,” said Steve Wolf of Helfman Dodge-Chrysler-Jeep-Ram-Fiat in Houston. “I tell customers every day, ‘Mr. Customer, I know you want a blue truck with a tan interior and this stereo and that screen and a certain type of roof and wheels. It doesn’t exist. So you either need to make some compromises on what you want or let’s order one from the factory.’ ”
Most dealers don’t expect much in the way of shipments in June. July seems more likely, Maroone said. “You might trade a Silverado for a Silverado,” he said, to get the configuration a customer wants from a nearby store, “but you’re not going to trade a Silverado for a Malibu.”