Auto industry not immune to nationwide supply chain issues
“It’s about survival, at this point,” dealer says of adjusting his business model
(KSLA) — From groceries to gas, we’ve all noticed an uptick in prices and a decline in inventories.
Shreveport area car salesmen told KSLA News 12 that they’ve been dealing with supply chain issues since the beginning of the COVID-19 pandemic and that there seems to be no end in sight.
“It’s put a lot of businesses in a real financial struggle just by trying to afford the inventory,” said Walter T. “Rusty” Pipes, owner and president of Pipes Auto Sales.
He said prices are up about 25% compared to pre-pandemic prices.
“They’re going to mark the car up. It’s worth more to them; it cost more to produce it,” Pipes explained.
Global consulting firm Alixpartners estimates “the shortage will cost the industry globally $210 billion in lost revenues this year, up markedly from its estimate in May of $110 billion.”
A shortage in computer chips, delays in spare parts and manpower issues are all part of the overall shortage.
As new cars have become more scarce, auto businesses like Jimmy Granger Auto Group have modified their business models to cater to shoppers who are looking to buy used cars.
“We have 350 used cars and about 28 new cars [at Jimmy Granger Ford of Stonewall],” operations manager Matthew Farrer said.
“It’s about survival, at this point. All good businessmen and -women are going to have to make those changes to their business models if they want to stay alive.”
This is the way to survive as the “the demand for used cars has never been higher. It’s off the charts,” Farrer explained.
“The products are flying off the shelves just as quick as we’re getting it in.”
Centenary college economics professor Dr. David Hoaas said the supply chain shortage likely will stick around for a while.
“If for no other reason than we have the holidays coming up, when we traditionally increase the demand for products,” he explained.
“There’s an old saying that a chain is only as strong as its weakest link. And that is absolutely true with the supply chain ... from factory to distribution to retail sales.”
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