As 2021 comes to a close, many of you may be wondering what we can expect as an industry and where we are headed. On today’s show Brian Finkelmeyer, Senior Director of New Vehicle Solutions at Cox Automotive, joins us to discuss inventory, EV makers, and we’ll also get his predictions for 2022.
2021 has just been a remarkable year for car dealers and OEMs says Finkelmeyer. He thinks this has been the buy product of this complete shift in the industry. Before the pandemic, there was about four new vehicle inventory for every one buyer. Today, it’s four buyers for every one vehicle inventory.
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Finkelmeyer thinks we’re going to continue to see these record profits, for the foreseeable future. As well as the microchip shortage, being with us for the next 18 to 24 months. Even as OEMs are able to increase their production, there’s an endless demand for fleet companies that are hungry for inventory. It’s going to take us time to where we can start building more units each month than what the consumers are absorbing.
Used car values are through the roof. Before the pandemic, nearly 10% to 11% of the final transaction price was incentives. Today, that number is down around 4%. Car companies may not be producing as many cars as they like, which has saved a lot of money for incentives. Finkelmeyer believes dealers and OEMs are thinking this probably isn’t a bad way to market.
Finkelmeyer says one of the most interesting things that’s happening in the industry is seeing an enormous amount of buy-sell activity with big dealer groups, such as Larry H.Miller, Park Place, and Suburban Automotive Group. There are billions of dollars being spent on public auto groups, buying these private auto groups. He says it’s going to be fascinating over the next five years to see how this all plays out.
Dealers have adopted digital retailing. He says it’s going to be interesting to see, to what extent do consumers gravitate to that approach. Consumers are doing part of the transactions online but when do consumers get to do their full transaction online?
97% of America is still driving internal combustion engines. This year, there are five new entrances in the lower size crossover segment, which is the biggest segment of EV players. There’s Toyota, Hyundai, Kia, Subaru, and Nissan, are all bringing out vehicles that are fully electric.
For 2022, Finkelmeyer believes we’re going to see more of the same thing. Cox Automotive is projecting a 15 million total (13.1 million retail) SAAR for 2022. He also believes we see a constrained inventory environment and sky-high grosses.
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