Automotive Demand Rebounds but Supply Concerns Persist – RVBusiness

Automotive Demand Rebounds but Supply Concerns Persist – RVBusiness


It’s tough to have a year-end clearance sale when there’s hardly any inventory to clear out, writes Hannah Lutz for a report published by Automotive News.

Automakers’ inability to restock dealerships after losing two months of production to the pandemic shows how quickly demand has rebounded, helping to spark hope among executives and analysts about the potential for a strong finish to a chaotic year.

The third-quarter performance “makes us cautiously optimistic for Q4, but there’s still a lot of uncertainty and a lot of Americans are still suffering,” said Mark LaNeve, vice president of U.S. marketing, sales and service at Ford Motor Co.

The inventory shortages, high unemployment and other troubling economic data make the fourth quarter somewhat precarious. Sales depend largely on automakers keeping their inventory pipelines filled with popular vehicles and consumers being confident enough to make a large purchase, analysts say. Still, many automakers and dealers anticipate that sales will continue to recover, whether or not a proposed second round of economic stimulus payments ultimately is approved.

“Many of us have been pleasantly surprised by the resilience that we’ve seen in the new-vehicle market,” said Charlie Chesbrough, Cox’s senior economist. “But we are concerned that there are tremendous headwinds as we head into the fourth quarter.”

The spring production shutdown to curb the spread of the coronavirus put automakers 3 million vehicles behind, Chesbrough said. Most automakers are back to previous production schedules but haven’t yet fully replenished dealership lots. The Detroit 3 had a 49-day supply last week, down from 65 a year ago, according to a Morgan Stanley report.

“They’re producing pretty good output for a couple of months, [but] they don’t seem to be making much headway in terms of restocking the shelves,” Chesbrough said. Unless demand decreases enough for automakers to restock, “this is going to be a problem, certainly through the rest of this year,” he told reporters last week. “Possibly it could last into the first quarter of next year.”

Click here to read the full report.

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