Major shortages of new cars!

[grober]

It appears I am not the only one that's noticed the shortage of new cars on sale in showrooms round the country. OK if you buy the only one sitting in the showroom in a colour you don't like, overspecced with unnecessary gismos putting thousands on the list price, and not a V6 petrol in sight.

Yes Sir that's correct --- the car you're about to buy will naturally reflect the buying tastes of the sales manager not you! Of course you can buy one with the specification and all those options you read about in the brochure but that would be a factory order----realistic lead time on that model ----- 6 months ------ but you may also wish to take out insurance in case you die before taking delivery.

This article quotes the "party line" New car waiting lists are longest ever - Parker's but cynics among us might see this as an ill-disguised attempt by manufacturers to firm up list prices in a diminishing market .

It's a mass produced item fer c*****sake crank up the production lines from dead slow and stop and get some cars into the showrooms NOW not next year when the VAT's gone up.

 

[Rory]

Anyone know if this is just a UK thing? My impression is that it is, but that might be wrong.

Certainly interesting to look at US dealers - they carry tons of stock, although there's less engine choice (diesels are rare) and they're mainly autos of course.

 

[Sonny Burnett]

Anyone know if this is just a UK thing? My impression is that it is, but that might be wrong.

Certainly interesting to look at US dealers - they carry tons of stock, although there's less engine choice (diesels are rare) and they're mainly autos of course.

sounds good to me

 

[Dryce]

It's a mass produced item fer c*****sake crank up the production lines from dead slow and stop and get some cars into the showrooms NOW not next year when the VAT's gone up.

Mass produced - but to order is the prefered operation.

Churning out extra cars to sit in showrooms or on airfields to be offloaded at a discount to fleets or as preregistered is too risky.

This is mainly down to risk and finance. New cars sitting unsold tie up capital and cost money in interest.

For VAT the date change is blurred by the way VAT works to invoice date rather than delivery date.

 

[MarkJunedd]

sounds good to me

+1

 

[grober]

I hear what you are saying but Audi's Ingolstadt plant produced more than half a million cars last year and I bet they weren't working to anything like full capacity? I always thought the point of mass production facilities was to produce lots of cars- rapidly. I'm not saying they should produce lots of unallocated cars but waiting over 6 months [Audi Q5 --May next year!!] for a factory ordered car would indicate other influences other than mere production capacity limitations at work.

ps Audi do seem to be among the worst in this respect.

 

[wemorgan]

I'm only guessing as to the reasons, but supply chain could be causing some OEMS to be making cars slower than others.

The past few years have been tough for suppliers, with many going under, or closing plants to rationalise. Now demand is increasing I suspect they do not have as much spare capacity as once before.

 

[Merco]

I guess it depends on what the car is. I was given an 8-week waiting time for my new car and although the EDD hasn't arrived yet and is subject to change, I thought an 8-week factory ordered car was pretty decent turnaround!

Unfortunately, I've been told by the dealer that as it was 8 weeks from order to EDD, I do not qualify for the collection option from Bremen! Boo Hiss! Really unfortunate as I would have loved to do that!

Hey-ho, I'll just enjoy the car on the right side of the road in that case!

 

[grober]

I'm only guessing as to the reasons, but supply chain could be causing some OEMS to be making cars slower than others.

The past few years have been tough for suppliers, with many going under, or closing plants to rationalise. Now demand is increasing I suspect they do not have as much spare capacity as once before.

Again I wouldn't dispute what you say, but the bottom line surely is-- if you are in the business of making and selling a product----and you haven't actually any "on sale"------ that's bad news for any manufacturer -----------or is it? Its certainly inconvenient to say the least for potential purchasers.

 

[Dryce]

Again I wouldn't dispute what you say, but the bottom line surely is-- if you are in the business of making and selling a product----and you haven't actually any "on sale"------ that's bad news for any manufacturer -----------or is it? Its certainly inconvenient to say the least for potential purchasers.

The companies have pared back labour.

If the company builds a car to order then it knows that it say takes 40 days from the point at which they take the order and get paid. They maybe have their suppliers on 30 day terms. They might pay their staff weekly. That means in principle that they are covering perhaps 35 days of labour costs and 10 days of external costs.

Now if they want to build cars speculatively there's a good chance that they're running with minimal excess labour - so there's no discounting mechanism to keep volume up based on spare labour capacity. The chances of selling the car quickly are less. And with a tighter market they risk undermining their own full margin sales if they have to sell off speculatively built cars at a discount. So maybe they build the car and take the risk - it sells after say 120 days at a discount. They've ended up financing the external costs for 90 days instead of 10 days. And the labour has been financed for 125 days. Worse they make a lower gross margin on the car to pay for this capital that's tied up.

In the good times you have extra labour about and there are seasonal and promotional ebbs and flows. Liquidity is cheaper to maintain and you have more of it. So building extra cars speculatively is less of a burden and possibly keeps your factories running more smoothly.

In the bad times you don't maintain the slack - you get rid of it. Liquidity is reduced and expensive to maintain. The cost of risk goes up.

 

[RBYCC]

Anyone know if this is just a UK thing? My impression is that it is, but that might be wrong.

Certainly interesting to look at US dealers - they carry tons of stock, although there's less engine choice (diesels are rare) and they're mainly autos of course.

New car inventory is down substantially at all USA dealers...
It's a result of the economy...
Dealers aren't going to pay the cost of the "floor plan" financing if sales volume is down.

Conversely most dealers have a better stock of popular CPO units...
This is due to favorable finance rates to move pre owned, especially those coming off of lease.

 

[James Rothwell]

I work for Skoda and to get an Octavia or Superb 4x4 DSG you are looking at 6 months wait.... Which I thought was pretty horendous, it's a diesel family car not a Morgan!

 

[grober]

I except everything you guys are saying but there's still a little voice in my ear saying "market manipulation"

 

[NISFAN]

Erm, I think the problem is that there is a very large growing country taking more and more of the stock every day. Can you guess which country that is yet?

 

[mykulmerc]

Buy a used car - more chance of getting the spec you want too

 

[trapperjohn]

Is that country left or right hand drive. I really have not a clue - perhaps it would not matter what hand drive if they are just sucking all the cars out of the system.

 

[NISFAN]

Yep it doesn't matter, the production line can only support x cars a day, regardless of spec.

 

[grober]

Erm, I think the problem is that there is a very large growing country taking more and more of the stock every day. Can you guess which country that is yet?

I thought they had their own production plants? and surely our currency is as good as anyone else's- unless they are paying more for their cars- which I very much doubt. The RHD/LHD thing may well be a possible issue though.

I always remember a story told by a mate from college who worked for a spell for De Beers as mining engineer. Next to his own mine was a very large flat area covered in concrete. It was surrounded by an electrified fence and patrolled night and day by armed guards. One day he asked a colleague what was going to built there and was surprised to learn it was a very rich diamond field! Why cover it with concrete then he asked. It's to to prevent too many diamonds finding their way onto the international market and maintain the artificially high price charged by De Beers he was told.

 

[219]

Waiting a few months for the car of your choice is surely better than getting something that has been rusting away in a field for months or even years ?

Certainly with Mercedes , there used to be a waiting list for every model ( sometimes a lot more than six months ) a little bit of scarcity can't hurt second hand values either .

 

[NISFAN]

I thought they had their own production plants? and surely our currency is as good as anyone else's- unless they are paying more for their cars- which I very much doubt. The RHD/LHD thing may well be a possible issue though.

I always remember a story told by a mate from college who worked for a spell for De Beers as mining engineer. Next to his own mine was a very large flat area covered in concrete. It was surrounded by an electrified fence and patrolled night and day by armed guards. One day he asked a colleague what was going to built there and was surprised to learn it was a very rich diamond field! Why cover it with concrete then he asked. It's to to prevent too many diamonds finding their way onto the international market and maintain the artificially high price charged by De Beers he was told.

Yep, my dad used to supply electronic security equipment to De Beers, they had vault upon vault full of diamonds, estimated 50+ years worth, but had a strict supply demand quota to release them.

Coming back to cars, yes our money is as good as anyone elses, however, China is getting much of the supply in order to 'build the brand' over there. UK and the rest of the western world is pretty much 'in the bag' as far as brand awareness goes. Controlled tightness in supply doesn't do profit margins any harm, so long as market share is not affected. As just about all the car companies are bending over backwards to supply a hungry giant, no harm done.

A friend of mine ordered a C220CDi back in May (through a lease company), and has just been given a delivery date of mid October. When asked 'how come so long' the lease agent claimed that due to short supply, high list price customers were being prioritised, i.e. MB dealer customers paying close to list, rather than cut price lease company deals. Lease guy said he is struggling to get cars right now from all the majors, and is causing big problems, as old cars are coming off lease with no new cars to replace them. Now is the time to buy shares in Avis and Hertz