How is the lack of new and used vehicle inventory impacting luxury buyers? To help us answer this question, we’re pleased to welcome back Tom Maoli, President and CEO of Celebrity Motor Car and host of Go Big or Go Home on iHeartRadio.
Historically, during inflationary periods, the Federal Reserve raises interest rates to curb demand for large purchases like automobiles. However, Maoli says that certain demands can’t be curtailed, and automobiles are one of them. The supply of new and used vehicle inventory can’t keep up with this demand, and customers are driving their cars for much longer than in previous years. As a result, customers are pouring more time and money into servicing the vehicles they already have.
Maoli is seeing vehicles come through the service department with 100,000-120,000 miles. That lifecycle is going to crash and burn at some point, he adds. The used car market will get stronger because those vehicles will eventually become undrivable. Additionally, Maoli’s fixed ops departments can’t service some vehicles because parts are in short supply and sometimes unavailable for long periods.
“I believe there is a trend that is coming behind what we are living today,” says Maoli. “And that is pent-up demand is going to be so strong that no matter what [OEMs] can manufacture, we’re still going to be in a supply shortage.”
Switching gears, Ford CEO Jim Farley made some startling comments recently regarding the future of Ford’s EV operations and the role dealers will play in that system. Maoli thinks dealers are already working behind the scenes to prepare legal defenses if Ford’s plans are implemented. If that does happen, Maoli says that the court system will likely side with the dealers and existing franchise laws. Proponents of direct sales might look to Tesla as an example of how to circumvent franchise laws, but other challenges are facing the EV market.
“I happen to believe that Tesla created a cult,” explains Maoli. “I think that the other car manufacturers are going to enter the industry, and they’re going to be selling vehicles…but I don’t see it taking over the whole industry.”
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