Butte County dealers navigate low inventory – Chico Enterprise-Record

CHICO — A worldwide shortage of microchips used to assemble new cars has devastated parking lots across the country. Dealerships in Butte County have changed their business to accommodate the changing market.

Chico Mazda Volkswagen General Manager Brandon Hitchman said his dealerships are experiencing short inventory starting in 2021.

“The biggest thing about scarcity is that it creates an uneven flow of inventory,” Hitchman said. “You get things like this… suddenly nothing comes for weeks.”

The Chico Mazda Volkswagen lot used to carry over 100 new cars at a time, but this year they only carried 5 new cars and 30-40 at most.

Hitchman said the impact of the auto parts shortage is stronger this year because there was still inventory in their parking lot at the start of 2021.

“If the inventory you have in place is worked out, now all of a sudden you’re working with an empty basket,” Hitchman said.

Oroville Ford General Manager Aaron Widener said his dealership is also experiencing a low number of new cars.

Oroville Ford used to ship 45 to 50 new cars — currently there are seven.

Widener said the dealership is lucky to get a shipment of 4-5 cars a week, with some of the cars already sold before they hit the ground.

“In August (of 2021), it started to fall further than it had already,” Widener said. “Inventory is down to two new cars on the lot.”

Widener said that after the wave of COVID in 2021, people became more motivated to buy cars and new cars started to disappear from sales. With fewer new cars, used car prices have risen sharply, with some cars going up $15,000 to $20,000, Widener said.

New strategies

Dealerships and manufacturers—in times of tight inventory—encourage more car orders instead of selling out.

Hitchman said Mazda Volkswagen dealerships sometimes sell cars before they arrive at dealerships. Cars are now listed as “on the road” on the dealership’s website, something they didn’t do before.

“We’re used to being able to say, ‘What do you want?’ It’s unrealistic for us to say that, even if we wanted to,” Hitchman said. “We’re still doing our best, but there are just some things out of our control.”

Hitchman said online ordering helps customers get the car they want, and ordering times have been reduced recently, to three to four weeks compared to three to four months earlier in the year.

Widener said online advertising is one of the biggest drivers of customer acquisition, and he expects online sales to grow over time.

“I think the manufacturers are definitely going to be pushing more and more to order more vehicles,” Widener said. “If they can continue to fill the order banks, then they can continue to fill those orders and keep the inventory low at the dealership.”

Widener predicts that online sales will continue because order-prioritizing business models like Tesla’s could prove successful in the future.

No changes nearby

Although inventories have dwindled, demand is still strong. Widener said.

On July 1, the Associated Press reported that automakers sold nearly 1 million fewer vehicles in the second quarter of 2022 than during the same period in 2021. Average new car sales prices in the first half of 2022 were reported to be nearly $45,000, up about 17.5%. than in 2021.

“Even though some things have changed, we’re seeing a slowdown in the market, it still hasn’t slowed down the buying of cars by dealers. They’re still paying a ton of money for them, so it’s just harder to get the inventory,” Widener said.

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