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Dealers and Customers Can't Have It Both Ways

Now that the Big 3 are back from brink of collapse, we're starting to hear complaints from dealers and customers about the new reality in car shopping: tight supply. Both are unhappy that they don't have as many models on the lot to choose from. In some cases with hot selling models, there's little or no selection because the dealers are sold out.

Woman looks at new Toyota Camry on dealer lot
AP
Woman looks at new Toyota Camry on dealer lot

While I understand their frustration at being unable to close a deal or push a hot model, I wonder if these people realize where we were two years ago?

Remember those days?

Remember when the Big 3 got caught up in the money losing habit of cranking out as many models as possible and flooding the market with so much supply they were forced to jack up incentives just to make a sale?

I do. And I remember how many dealers told me they wish the auto makers didn't push supply on them because it hurt transaction prices, residual values, and their ability to grow profitable sales. To quote one dealer, "These guys (the Big 3) are never gonna learn."

Well, now that the GM, Ford, and Chrysler have seen the light and are keep a lid on production, people are screaming for Detroit to open the spigot. If the folks running the Big 3 are smart, they'll hold their ground. They've finally made it to a point where incentives are in check and profit margins are growing.

Sure, some customers may be ticked off they have to wait to get the car or truck they want. And I suspect there are dealers frustrated that they've lost a sale of two because they don't have a particular model on the lot. Unfortunately for both that's the new reality.

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