There aren’t enough new cars, main US automotive lender says
Ally Financial Inc., the largest U.S. auto lender, said carmakers should get busy.
There’s enough consumer demand for manufacturers to ramp-up output of new models but not enough supply, Chief Executive Officer Jeffrey Brown told investors at a conference on Tuesday.
“Factories have to get back to work,” Brown said, noting he’s been in discussions with Rick Hendrick of Hendrick Automotive Group, of Hendrick Automotive Group, which has 95 dealership locations across the country. “When I talk to his stores directly, they tell me their biggest challenge is lack of new-car inventory. The factories aren’t producing enough.”
Automakers have been stretched thin by pandemic-related absenteeism, distancing protocols, quarantines and supply-chain constraints. All this, combined with the two-month shutdown this spring to contain Covid-19, has made it difficult for factories to match the rebound in consumer demand for new vehicles driven by low interest rates and a shift toward private transportation.
Companies are trying to make up the difference even as virus cases surge to new records. Output is nearing pre-pandemic levels, but inventories are still thin. The number of all new cars and trucks available in the U.S. was almost one million units lower in October than a year earlier, according to researcher LMC Automotive.
Complaining about depleted supply is a common refrain from dealers, but Brown’s comments are a bit of a departure for lenders. Banks have spent years wagging their fingers at automakers for pushing out too many cars.
The lack of reliable inventory is helping to spur business at new players in the used-car space, such as Sonic Automotive Inc.’s EchoPark and Carvana Co., Brown warned.