Local dealerships explain vehicle shortage issues

‘It's just driven the market crazy’


ROCHELLE ⏤ Mike Myers has been in the car and automotive industry all his life.

And he says he’s never seen a situation like the industry is in now. COVID-19 created a chip shortage in auto manufacturing that has slowed new car production. At the beginning of the pandemic, demand slowed before speeding back up. Now there’s “pent-up” demand with a shortage of new cars on the market. 

“Demand is so high and you can't get the new cars, so it's just driven the market crazy,” Myers, the general manager of Jeff Perry Chevrolet Buick Cadillac in Rochelle, said. “We have to sell what we have or sell used cars. And that's driven up the price of used cars. The factory has reduced some of the rebates on new cars, so the price of new is up, the price of used is up. It's just a shortage of cars. All created by COVID-19."

Myers said the dealership is doing more sold orders than ever before, which is ordering customers a car they want. The new cars that Jeff Perry is able to get are selling before they even hit the lot. 

Prescott Brothers Ford General Sales Manager Chad Young said his Rochelle dealership is operating on new car numbers that it’s never seen before with the shortage. 

"You started seeing a real extreme effect and things start coming down the line around the first of the year,” Young said. “It was a problem in the last quarter of last year as well, but it really started to pile up on everybody in the first and second quarters of this year."

Young called recent months in car sales an “up-and-down roller coaster ride.” He’s heard from customers that think the market is “a little bit crazy.” But those customers have been happy with their trade-in values with the used car market up, Young said. 

Myers said Jeff Perry has seen situations where a person bought a vehicle a year or two ago and are getting more on trade-in than what they paid for it. In what he’s read, the used car values are 26-45 percent higher than what they were a year ago. 

"If you have any interest in buying a car, now is the most you’re going to get for a trade-in,” Myers said. “The most I've ever seen. And actually I think the cycle is starting to level off and maybe head down a little bit. So if you're thinking about getting a new car, now is the time to do it. Because your trade-in will never be worth more than it is."

The only other unprecedented time in the car market Myers could compare the current climate to was when gas prices spiked in 2008. And that had the opposite effect with truck values going down and people buying smaller cars with better gas mileage. 

Myers has seen customers in recent months become frustrated about not being able to get the new vehicle they want or customized the way they want it. General Motors has scaled back some features to reduce the amount of chips per vehicle. 

“Yeah, I can order a Silverado, but I can't order it with the safety package they want because they're holding those chips to build another truck rather than put more in that truck,” Myers said. “So, they’re frustrated they can't get what they want and they have to compromise and have to order it instead of just going out and getting it."

Young said it’s been tough recently even with used cars on finding the exact fit customers are looking for. He said his used car operations manager has done “a great job” on keeping necessities on the lot that fit a lot of needs. 

Young said other dealers in the area are combatting “real inventory shortage problems.” Finding that exact vehicle has been harder. 

“It may take us a little bit longer,” Young said. “We used to be able to go get that vehicle for you in 3-10 days. It might take us a couple weeks now. It just means we work harder and that's one of the things I preach to these guys. We just have to work a little bit harder. It may take us a little bit longer, but we're still going to try to take care of you the best we can."

The initial COVID-19 shutdown in March was a “scary” situation for Young because of the unknown. Once mid-May and June came, demand returned for vehicles. “Quite a few” at-home deliveries and contactless purchases were done. 

Myers said the more-recent changes in the market have made doing business “definitely” more difficult. After explaining the situation to frustrated customers, they may not necessarily be happy about it, but they understand. It’s been rougher on sales staff not being able to get customers what they want. 

The Jeff Perry sales staff talks about the market in daily meetings and where they’re at with inventory. They’re told what General Motors is and isn’t manufacturing. Changes in the market haven't had a negative impact on business. 

“The store is in good shape,” Myers said. “We're selling our new cars for probably more than we ever have. Some dealers are asking for more than window sticker and MSRP for their cars. We aren't doing that, but we're selling for more money than we ever have. Except we don't have many of them to sell."

The parts department at Jeff Perry is also seeing some part shortages due to COVID-19, but not nearly as bad as it did last year, Myers said. He believes with the new car shortage, people are buying parts and fixing their old cars. 

Myers said General Motors thinks the fourth quarter will see better positions with building cars. 

“It's going to improve,” Myers said. “But to get back to what it was before this, I think is a couple year process, to get the truck inventory back to where it was."