If you travel Wyoming’s “miles and miles of miles and miles” you need an automobile, but if your current one isn’t quite cutting it, don’t expect the car buying experience to be anything like it was way back in 2020.
Vehicle shortages and supply chain disruptions have completely changed the landscape of the automobile business in the last two years, experts told Cowboy State Daily.
“Everything changed in February or March of 2020,” said Scott Cargill, general manager for White’s Frontier Motors in Gillette and past president of the Wyoming Automobile Dealers Association.
That’s when COVID-19 shut down auto production for months and Cargill said auto makers still haven’t caught up.
“On my lot as far as new vehicles at the end 2019, I had 110. On my lot now for new vehicles, as of today I have nine,” he said. “For three months we got nothing. Then when we started back up there were shortages of all kinds of different parts.”
“Ridiculously More Expensive”
Jessica Caldwell, works for Edmunds, a company that exists to advise people on car buying. She said the challenges facing Wyoming car buyers are many.
“It’s pretty daunting out there for consumers,” Caldwell, executive director of insights for Edmunds, told Cowboy State Daily. “Everything is ridiculously more expensive.”
She said the global shortage of semiconductor microchips, the components needed to make the electronics work in everything from new vehicles to video game consoles, is only the most common problem.
It’s a global supply chain issue, she said.
One dealer may not be able to get wheels. Another can get wheels, but not something else. China, a primary provider of automobile components, continues to see disruptions in its ability to provide goods with each new resurgence of COVID-19.
When Will It End?
The car market for consumers is unlikely to improve anytime soon, according to Cargill and Caldwell.
“When we get vehicles from the factory, our allocations, they have continued to be smaller for the last two years than they were pre-COVID,” Cargill said.
He received word from a car maker the day he spoke with Cowboy State Daily that the car maker was shutting down a truck factory for a week because of the chip shortage.
“The factory has been telling us it’s going to get better as 2022 goes on, but I don’t see that,” Cargill said. “I haven’t seen any signs that it is getting better.”
“At end of 2021, forecasting felt like there was more optimism, that things were going to get better. We were on the way to recovery, but now as we start the second half of this year, it doesn’t appear to be that way,” Caldwell said. “It doesn’t feel like anyone has a good handle on when we recover from the chip shortage. It’s hard to get a grip on.”
Because of the severe shortage in supply, the car market experts said factors like high gas prices and high interest rates for car loans are not yet affecting the market like they once would have.
“If we could ever get stock to go up, then it could affect that,” Cargill said. “It just doesn’t matter now when there are no cars to sell.”
“The last couple months, interest rates have gone up. The gas price spikes continue,” Caldwell said. There is probably some softening of consumer demand, people who maybe don’t need one right now. They may wait until they absolutely need one… but dealers are selling whatever they have.”
She said in the past when faced with high gas prices, consumers might have opted for more fuel-efficient vehicles. They may have a preference for a certain type of car. They might always go to the same dealer.
These things are changing. Car buyers are purchasing what is available wherever they can get it.
The key to car buying today is changing expectations, Cargill and Caldwell said.
“We are still doing business. People are still buying cars,” Cargill said, but being “patient and flexible are what people need to be.”
In Wyoming if you see a truck or a large SUV on a car lot there is a good chance that it is already sold, he said.
“We are selling vehicles to people all over the country,” Cargill said.
Supply And Demand
“Be flexible. The more flexible you are, the more likely you find something to suit your needs,” he said. “If you are coming on my lot now looking for vehicle, I have nine choices.”
Post-2020, a lot of Cargill’s customers have come in to order vehicles. Being patient and flexible helps in this process too.
“Before when you ordered a vehicle, you would tell me what you want. I would put in the sold order and 6 to 8 weeks later the vehicle would show up,” Cargill said.
Now when a customer gives him an order they have to wait until he “earns” inventory from the factory before the customer’s order gets put on the build list.
Dealers earn inventory or allocation spots based on a national daily supply average. If they have less than the daily supply average, they earn spots. If they are at the average or more they don’t earn spots.
“There’s only so much to earn in the pot. It’s a national pot,” Cargill said. “It could take up to six months to get a vehicle. Once the order gets placed the timeline is quicker, but they could wait to get the order placed.”
Caldwell said Wyoming car buyers are not at a buying disadvantage compared to people in higher population areas or who live near ports. The supply shortage is everywhere. There are no hidden pools of vehicles waiting for customers to find.
“There isn’t any excess,” she said. People are searching for cars nationwide, or at least much further away than they would have pre-COVID. ‘Ho-hum’ makes and model cars are being snapped up just about as fast as popular or “hot” models.
“Supply is low. It has been, not just for a few months, but for more than a year and it’s significantly lower,” she continued. “If you see something you like and in the realm of what you can pay, act fast.”
Caldwell heard stories of salespeople at dealerships selling cars while customers of another salesperson were on the way to pick up that same car.
Used Car Market ‘Insane’
In the past buying a used car was an option for people who could not afford a new car. These days, the used car market is “something we’ve never seen before,” according to Kort Kinney in Riverton.
He’s seen a lot. Kinney worked in the car business for decades, starting as a salesman then business manager and eventually general manager for a dealership in Fremont County. After a brief stint at retirement he opened his own business where he sells used cars and cars on consignment.
“Since COVID we have seen the market increase exponentially,” Kinney said of the used car market. “I have been in the business 40 years. I’ve seen prices inflate, but nothing to this magnitude, not even close.”
He said with the lack of new cars, dealers are buying up used car inventory and that demand has driven used car prices “through the roof”.
“Two- to three-year-old vehicles are selling for more than their sticker price was brand new,” he said.
That is what the dealer is paying and he said some “sleazy” dealers mark those prices up much higher than they reasonably should.
“Certain vehicles are going for $20,000 to $30,000 above MSRP (Manufacturers Suggested Retail Price). It’s total insanity,” Kinney said.
But he predicts it won’t stay that way.
“When you have lived a long time, I’ve lived for 64 years, you see a lot of things happen and it seems to repeat itself,” Kinney said. “People who are younger say it will never end, but it always does.”
In the meantime, Kinney is advising people who don’t absolutely have to buy a car now not to.
“Eventually things are going to come back to roost,” he said. “The shortage will eventually be over. Inflation will be over. When that happens, people who have bought a car paying an inflated price will be upside down.”
Caldwell said used car buyers especially should “look at the full finance picture instead of just the asking price.”
Used car buyers often finance and are generally charged a higher interest rate than for new cars.
“Look at what you are paying for finance,” she said. “If a used vehicle costs less, but has a higher annual percentage interest rate over the course of years,” it may not be as good a deal as it appears.
Caldwell encouraged people trading in or selling their cars to research how much their car might be worth before they sell it because of the stark changes in the market in the last couple of years.
“The days of not getting very much for a trade-in are over,” she said. “If it is a relatively new vehicle, you are getting near what you paid, with some exceptions.”
Kinney hoped for changes soon that would make car buying less daunting than it is right now.
“I feel for the people. I really do,” Kinney said.