The auto industry is undergoing a painful period where chip, foam, and rubber shortages are forcing many car manufacturers to severely limit the number of new cars produced. The effect is evident with the news both Ford and GM have temporarily suspended production at domestic locations, while Toyota has slashed production at 14 factories overseas. The limited amount of inventory has forced many consumers to consider purchasing a used car rather than wait for new models to become available. However, for independent auto dealers, it appears the mix of demand and limited inventory are creating new challenges. The Cox Automotive Dealership Sentiment Index for Q3 2021, found that while the used car sales environment is much more favorable overall profitability has not increased. In fact, some are even experiencing pressure to lower prices. Despite this, it appears used car sales will remain strong until new car production issues are resolved. To help clients, prospects, and others, Wilson Lewis has provided a summary of the key survey findings below.
The survey was conducted online between July 26th and August 9th and includes online responses from 524 independent auto dealerships from across the nation. Dealer responses were weighted by sales volume to be representative of the national dealer population. It is important to note that data is used to calculate an index (from 0 to 100) where a score of 50 or greater means more dealers view conditions as strong or positive and lower scores reflect the opposite sentiment.
It appears from the report that inventory acquisition is a key issue facing many Atlanta independent auto dealerships. As inventory challenges continue, dealerships need to carefully review pricing strategies and cost drivers to ensure increased profitability. If you have questions about the information outlined above or need assistance with a dealership tax or accounting issue, Wilson Lewis can help. For additional information call us at 770-476-1004 or click here to contact us. We look forward to speaking with you soon.
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