Where have all the cars gone? California dealers scramble to meet demand

Whittier school teacher Buster Alexander was in a bit of a buyer’s bind. Her lease on a Mini Cooper was up and she wanted a new car.

Instead of kicking tires and comparing models and prices at a leisurely pace, she found a feeding frenzy. Dealerships were packed with people like her looking at too few cars.

After a fruitless search for a new Mini, she and her husband wound up at Norm Reeves in Cerritos.

“They had a few Civics and literally one Accord,” she said.

The sales rep said the Accord would likely be sold within the hour. “We literally had to stake a claim on it immediately — or walk away,” she said.

Feeling “pressured” she bought the Accord.

Alexander’s story is not unique in California. Visit a dealership in most cities and you’ll see the same thing: lots of empty spaces. Dealerships, in particular, have taken to parking available models sideways or in every other spot to make up for missing 2022 models.

Consumers, loaded with cash and eager to get out and spend after 18 months in pandemic purgatory, are finding supply is very low.

“Demand is completely skewed,” Bindiya Vakil, CEO of Resilinc, a consulting firm that helps companies manage supply chains, told The Associated Press. “This has now become more and more painful by the day.”

New auto inventory across California is down 75%, according to analysts at Edmunds in Santa Monica.

John Sackrison, executive director with the Orange County Automobile Dealerships Association, said he’s never seen inventory so thin in his 30 years in the business.

“The equilibrium we saw this spring and over the summer has turned into a very significant disruption,” he said.

And while more vehicles are arriving daily, “we won’t be back to prepandemic numbers until late 2022,” Sackrison said.

What’s going on?

The U.S. auto industry has buckled under a domino effect of supply disruption. First, it was a lack of computer chips, and now it’s myriad other parts that have gone missing, Sackrison said.

A fire at Japanese chipmaker, COVID lockdowns in Vietnam and Malaysia. It’s all adding up to a big production stall for automakers.

OCADA’S latest economic report to Orange County dealerships estimated new vehicle sales would drop 19% in the year’s final months because of supply issues.

“Demand is definitely outstripping supply,” Sackrison said.

U.S. sales in 2020 dropped 14.4%, but California was hit harder, with sales down 21.7%, according to the California New Car Dealers Association. The trade group noted in August that 2020’s sales decline wasn’t as bad as the 58% sales drop in 2009 amid the Great Recession.

CNCDA analysts expect 2021 sales will surpass 2020 numbers by 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.

Mark Normandin, a Jeep dealership owner in San Jose and chairman of the California auto group, says “current trends are a promising sign.”

“There remain a number of uncertainties for future economic trends,” he wrote in a message to members. “While consumers continue to engage more confidently with dealers, ongoing unemployment, inventory, and potential restrictions require businesses to approach these optimistic signs with a sustained sense of pragmatism.”

Santa Ana resident Christine Hernandez was one of those auto-seeking spenders. Her mission: find a new Subaru Crosstrek.

With no such Subarus available in Orange County, she found herself in Long Beach at Timmons Subaru.

“I got lucky. They had one model coming in that was not reserved,” she said. Hernandez put down a deposit in mid-august and got her car Sept. 28.

Her transaction in Long Beach means the sales taxes will fall outside of Orange County, something Sackrison and his team noted to city leadership.

OCADA issued a warning in recent weeks to local governments, saying the slump could negatively affect municipal coffers.

“A recent survey shows that sales tax revenues in the third quarter of 2021 have decreased by 13%,” OCADA wrote.