Long lead times still causing big problems for car dealers

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Lead times on many new cars are not getting any shorter and are proving to be very frustrating for many franchised car dealers and their customers. As a result managing buyer expectations is taking on a whole new meaning.

In the past a factory order of any sort, even where there may have been several options ordered, was rarely more than 3 months in most cases. Today with some car makers that has stretched to 6 or even 9 moths and incredibly in some cases even longer.

The reasons for this have been well documented but in a year where every sale is likely to count peoples patience is being tested to the limit. We spoke to one of our contacts in BMW and he said that for many models, especially the X3, they have filled their allocation and will be unable to satisfy a new order this year!

Not only does this negatively affect the business but staff morale is equally adversely affected as they don’t have the confidence to present to customers knowing they will not get a car in a reasonable time frame.

The popularity of some cars has also had an effect. For many car buyers this means they can virtually forget about getting a hefty discount as there is no incentive for dealers to do this if there is such limited opportunity to do so.

We have even heard of tales where sales people are haggling about including mats and a tank of fuel in the deal. Managing the expectation of the customer is probably the biggest challenge as, like most of us, once we have made up our mind and committed to buy something we really would like to have it and be enjoying it straight away. Therefore a lack of effective communication from the sales exec is likely to add to the frustration. It is tempting for the sales exec to give a bit of hope where perhaps brutal honesty maybe the best policy.

The other side of the situation is the valuation of the customer’s existing car. In the trade we are used to giving our professional opinion on cars 3 months in advance with the valuation tools we have at our disposal. There are also some models where it is possible to value much further down the line but getting the price wrong or being faced with a rapidly changing market could all but wipe out the profit made on the new car if the trade-in is not worth what it has been valued at.

Many dealers are pricing cars for today and basing the depreciation on the trade guides but as the guides cannot even agree on the value of many models anyway it is a potential minefield for all concerned. If customers are not sure what their financial commitment will ultimately be it is not a situation that will give them confidence if their car is worth thousands less when they come to collect the new car.

Hopefully the situation will ease in time but in the meantime if buyers are not prepared to wait car makers who can produce the goods quicker are likely to be the winners of the waiting game.

It will certainly be interesting to see who the movers and shakers are in our Car Makers Premier League over the coming months.