Whittier School teacher Buster Alexander was in a bind of a buyer. Her lease on the Mini Cooper had run out and she wanted a new car.
Instead of kicking tires and leisurely comparing models and prices, he got a feeding frenzy. The dealership was full of people like him who were looking at very few cars.
After a fruitless search for a new Mini, she and her husband wound up at Norm Reeves in Cerritos.
“They had some civics and literally a compromise,” she said.
The sales rep said the agreement would likely be sold within hours. “We literally had to claim it right away — or walk away,” she said.
Feeling “pressured” he bought the Accord.
The story of Alexander is not unique in California. Visit dealerships in most cities and you’ll see the same thing: lots of empty spaces. Dealerships, in particular, have moved the available models for the unavailable 2022 model to parking it on the sidelines or every other place.
Consumers, laden with cash and eager to step out and spend to get rid of the pandemic after 18 months, are in short supply.
“Demand is completely skewed,” Bindiya Vakil, CEO of Resilin, a consulting firm that helps companies manage supply chains, told the Associated Press. “It has become more painful now day by day.”
New auto inventory across California is down 75%, according to analysts at Edmunds in Santa Monica.
John Sacrisson, executive director of the Orange County Automobile Dealership Association, said he had never seen inventory so thin in his 30 years of business.
“The balance we saw this spring and summer has turned into a very significant disruption,” he said.
And while more vehicles are arriving daily, “we won’t be back to pre-pandemic numbers until the end of 2022,” Sacrisson said.
The US auto industry has succumbed to a domino effect of supply disruptions. Previously, it was a lack of computer chips, and now it is the myriad other parts that have disappeared, Sacrisson said.
Fire at Japanese chipmaker, COVID lockdown in Vietnam and Malaysia. All this is adding up to a huge production stall for the automakers.
OCADA’s latest economic report to Orange County dealerships estimates new vehicle sales to fall 19% in the final months of the year due to supply issues.
“Demand is definitely outpacing supply,” Sacrisson said.
US sales fell 14.4% in 2020, according to the California New Car Dealers Association, but California was hit hard, with sales down 21.7%. The trade group noted in August that the 2020 sales decline was not as bad as the 58% drop in sales in 2009 amid the Great Recession.
CNCDA analysts expect 2021 sales to outpace 2020 numbers by more than 13%. California has topped 2 million new car registrations since 2015, but since the pandemic hit, that number has fallen to 1.64 million in 2020 and an estimated 1.85 for 2021.
“Current trends are a promising sign,” says Mark Normadin, owner of a Jeep dealership in San Jose and president of California Auto Group.
“There are many uncertainties to future economic trends,” he wrote in a message to members. “While consumers continue to engage with dealers more confidently, ongoing unemployment, inventory and potential restrictions require businesses to look at these optimistic signs with a continued sense of pragmatism.”
Santa Ana resident Christine Hernandez was one of those auto-seeking spenders. His mission: find a new Subaru Crosstrack.
With no such Subarus available in Orange County, he found himself in Long Beach, a Timmons Subaru.
“I got lucky. They had a model coming out that was not reserved,” she said. Hernandez made a deposit in mid-August and received his car on September 28.
Her transactions in Long Beach meant that sales tax would fall outside of Orange County, something Sacrison and her team noted to the city’s leadership.
OCADA has issued a warning to local governments in recent weeks, saying a recession could have a negative impact on municipal coffers.
“A recent survey shows sales tax revenue decreased by 13% in the third quarter of 2021,” OCADA wrote.
no instant gratification
The lack of demand has forced dealers and shoppers to use an already under-used strategy: pre-order.
Sarah Sadeh was six months pregnant with her first child when she began resizing her vehicle at the end of the summer. She and her husband scramble to find the SUV in time.
“We had to essentially tell the dealer exactly what we wanted, test drive elsewhere, and he put us on the priority list,” she said.
In late September the couple zig-zag from Kia to Hyundai dealerships in Garden Grove, Irvine, Fullerton and Anaheim. They were met with vehicles ranging in price from $5,000-$10,000 at retail. And “they had zero ’22 in anything,” she said, recalling her disappointment.
Eventually, he ordered an SUV at a Hyundai Patterson in Tustin and got it on 13 October. His experience, though lengthy, ended on a happy note with some caveats.
“Pro: No bargaining on price. MSRP was there. Con: Same thing,” she wrote briefly via email.
She also noted that there were very few options in the bells and whistles offered. “And we never technically tested that,” she said.
Like Saccharison at OCADA, Caldwell, an Edmunds analyst, is also expecting inventory to improve in 2022 unless an additional “black swan” event derails manufacturers.
For now, buying has been relatively slow, she said, as people lean into the holidays and shy away from kicking up available tires.
And for those still looking forward to buying a new ride?
“I think we just have to reset some of our expectations … and I felt like it was the same for other industries,” she said.