Are we seeing the fall of the used car market? Today on Inside Automotive, we’re discussing the state of the automotive industry as it relates to dealerships and what can be learned from their difficult year. We’re joined now by Dave Kelleher, President of David Auto Group, to share his perspective.
Kelleher explains, “I currently have 204 cars in stock, but typically, this time of year, I would have 750.” Stellantis is creating an inventory based on high-quality products rather than items that move quickly. According to Kelleher, “Stellantis is struggling in shares because there is such a demand for Wranglers and they can’t get us enough, and the same is true for Grande Cherokees. They only produce 40 Wagoneers per day because they are so concerned with quality.”
Consumer traffic is currently slow in dealerships. As a result, the used car market and cars that have been sitting on the lots longer are now being negotiated. Whereas, “the presold orders are heavily in play,” adds Kelleher. He points out, with 213 deliveries, his dealer was third among 280 dealers in the Stellantis middle lane business center last year. He finished third again this year with 117 deliveries.
The fundamental fact is that as inflation, interest rates, and the federal government all slow down, it affects payments, which ultimately drives away customers. Kelleher has put in place a plan for his staff to help with the impending challenges in the new car market. To account for how many hours his dealers can work in the shop in relation to parts and used cars, he constructed an absorption strategy.
According to Kelleher, “as a lease dealer, I never charge over the listing price given the current market shifts. 58% of my company’s space was leased in 2021 compared to 46% in 2022.” He continues, “cheaper payments and the used car market are what’s going to carry the way in the upcoming months.
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