Hundreds of new cars are waiting to get microchips installed so they can be shipped out for consumers, but with a shortage of microchips, those vehicles aren’t going anywhere, anytime soon. That’s causing a demand for used cars, and consumers are paying top dollar to get one. You might think with the high demand and the high prices of vehicles, you would have higher profit margins, but Matt Nimey, the Owner of Nimey’s New Generation Cars says that’s not currently the case in this industry.
"Shipping has gone up. The cost of the vehicle has gone up. Buy fees have gone up because it’s harder for auctions and companies to keep employees and staff on board, so the expense all the way across the acquisition process has gone up."
The used car market is very competitive, and with demand so high, you’ll likely be paying top dollar for a vehicle.
"Prices I think have sort of reached a point where they may be maxed because a vehicle can only be worth so much money. At some point it has to stop going up, but I think we may have reached that point."
Many dealers depend on a high volume of sales to maintain operational costs, but with the lack of inventory, owners will need to find new ways operate.
"It’s hard to keep staff when you don’t have a ton of business going on. If you’re a sales team of 20 guys, and you used to sell 250-300 cars a month, but now you can only acquire 15-20 cars a month, how do 20 sales people make a living?"
The problem isn’t just a lack of inventory. The profit margin on a used vehicle is more competitive than ever, and being able to service a used vehicle is getting tougher by the day.
"It’s a little harder to get parts. It’s a little harder for a lot of the nuances in the car industry, so are the little dealers going to…. I don’t … I can’t say anybody’s going to go out of business at this point, but if it continues to get harder, I don’t know how many people will want to stay in the business."