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‘Stagnant’: Fears for auto sales until 2023

• Local dealers see up to 200-vehicle backlogs

• Shipments ‘95% pre-sold’ but can’t get product

• Demand/supply mismatch ‘never’ seen in 40 years

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Auto dealers fear new car sales will be “stagnant” for at least another year with global supply chain disruption causing order backlogs of up to 200 vehicles for some operators.

Fred Albury, Auto Mall’s principal, told Tribune Business that product shortages were impacting the industry’s ability to increase sales with the few shipments he is receiving frequently “95 percent pre-sold” before they even arrive on the dock in Nassau.

With demand high, but supply unable to meet it, he added that he had never experienced such a mismatch and market imbalance during 40 years in the new vehicle business. Having initially hoped that the global auto industry supply chain would resolve its woes this year, the Auto Mall chief said manufacturers have now warned it will last well into 2023.

“It’s pretty much the same. For some dealers I understand it’s even got worse,” Fred Albury told this newspaper of the situation. “For Suzuki and Hyundai I’ve got back orders of about 200 vehicles, which were ordered but have not even been produced yet.

“With Hyundai, one particular model, the Tucson, we had about 40 units back ordered and they just got cancelled and everything. We’ll have to order that for 2023, and the price will have gone up by then. The price is coming through higher because of freight charges and increases for materials and so forth. It’s not a pretty picture.”

While Bahamian auto dealers had expected suppressed buyer demand as this nation emerged from the COVID-19 pandemic, Fred Albury said the opposite was true and no one had anticipated the supply chain breakdown. “I had one of the major rental car companies the other day looking for cars,” he added. “He’s going to have to purchase one or two here, one or two there and pray over the next five to six months that he gets those vehicles.

“I don’t see things improving until possibly some time next year. The indications we’re getting from our suppliers, our brands, are that is going to be the case. Production is going to remain tight because of demand in the big markets such as the US. Because of the shortage of raw materials and so forth they’re just playing catch up to secure those big markets. 

“It’s impacting sales; the potential to increase sales. It’s going to keep us stagnant for at least 12 months. People come in and sat they’re just shopping and can they get today’s price. I say: ‘Yes, but there’s no guarantee that will be available tomorrow or in the next two months. What I’m getting in, 95 percent of them are pre-sold by the time they get here,” Fred Albury told Tribune Business.

“I’ve got really good cash flow from this, not having inventory come and sit on the premises for 90 days. It’s just getting inventory. In the past, I’d be able to supplement my inventory by going to the US and picking up a couple of units here and there. I cannot do that. Dealers over there cannot sell a vehicle. If they consider selling it to me, I have to pay sticker price purchase prices.

“If it’s $40,000 over there, I have to pay $50,000, $55,000 just to get the vehicle. It’s a bidding war over there. It’s supply and demand.” With many Bahamians likely to pay more in servicing and maintaining their vehicles to keep them on the road, Fred Albury warned that they may also face delays in obtaining the necessary parts which will also have endured cost increases.

“This marks 50 years that Quality Auto has been in business. We started in the new vehicle business in 1982 and have never experienced this,” he added of current trading conditions. “It’s not just the auto industry. It’s the food industry. You go into the supermarket and they’re selling all sorts of brands you’ve never seen before. You see brands never accustomed to being there.

“You go into Lowe’s Pharmacy, and I couldn’t find shampoo. My brother could not find shaving cream in there. I think there’s going to be more shortages down the road and people are going to have to learn to adjust.”

Ben Albury, the Bahamas Motor Dealers Association’s (BMDA) president, told Tribune Business that the supply of new vehicles to his dealership was down by 80 percent compared to pre-COVID levels. The Bahamas Bus and Truck general manager added that parts were off by 30-40 percent, and backed his namesake by agreeing that the sector’s product and inventory woes are likely to continue into 2023.

“There’s still no relief ahead, and no indication when relief will come,” Ben Albury said. “You just don’t know where production stands. If I order 100 cars, within the timeframe I should get them, I probably get 15. It’s pretty poor. There are some vehicles I ordered last year, February 2021, and I still haven’t received them yet. They normally have a four-month delivery time.

“Component shortages, raw material shortages, inflation, shipping hold-ups, it’s just unbelievable. The type of effect it has, it just spreads and spreads. Hopefully there will be some relief soon, but probably not much this year. If I were to guess I would say we’re looking at some point in 2023. The cash flow is the real kicker because you have cash deployed for the production and do not get it.”

Comments

JokeyJack 2 months ago

Yes, i guess cars are made in the Ukraine too, LOL

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Bobsyeruncle 1 month, 4 weeks ago

Nothing to do with what's going on in Ukraine. This has to do with supply chain issues from back when most of the world was shut down due to COVID. Everyone (not just automakers), are still scrambling for computer chips etc out of China, Vietnam and the rest of Asia. Kitchen Appliances are another casualty of this. as well as computer parts.

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Sickened 2 months ago

According to my friends in the US prices for new cars have gone up about $10k on average. Where before you could buy cars for a thousand or so below suggested retail value and now prices are about $10k above suggested retail.

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Bobsyeruncle 1 month, 4 weeks ago

Correct, and on a percentage basis, the price of a used vehicle has gone up even more. Major dealers are offering great trade in deals on good used vehicles

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TalRussell 2 months ago

Comrade Freddy, what will not be “stagnant” are escalating interest rates will force 1 out 4 mortgaged Home Owners to sell their homes ― Yes?

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Sickened 1 month, 4 weeks ago

Raising our prime rate will not help keep our demand low and thus lower inflation. A higher prime rate will only hurt our economy more. The idea of raising interest rates is to make saving more attractive. But how many of us have more than a thousand dollars in our savings accounts? And how many of us don't live paycheck to paycheck us thus cannot even contemplate increasing the amount we save? Unfortunately we may just have to ride out the high prices until the supply chain is fixed and international demand tapers off.

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John 1 month, 4 weeks ago

Someone once said , maybe in a Social Science book, that man will eventually create a society that it cannot manage or control.’ One would think that with the high age of technology and instantaneous communication, it would be those inputs that cause failure. But all the major supply interruptions, shortages of goods and services, and inability to meet demand is due, mostly to the human input. And not only is the world economy in trouble, but the US is facing shortages of its own. And it is also saddled with the problem of gun violence, where mass shootings seem to be increasing every day. And law makers seem to have no solution to this problem except to ‘increase the number of citizens carrying legal weapons.’ These include teachers, pilots, care givers etc. then there is the troubling incidences of drug overdose that too is increasing unquestionably and alarmingly. Experts have warned the president that America is in a mental crisis, a sort of mental breakdown and more resources are needed to fight this crisis. But the president had ignored this information. Here, in this country, there is a call for more resources to deal with mental issues. For persons who have lost loved ones, a number of the m over a short space of time. For people who are now permanently scarred from the effects of Covid-19. For persons who have lost jobs and homes and businesses from athe pandemic. If only a hotline to call

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