Posted by Colin Heggie on Nov 23, 2021
Past SSR member Pat Loehndorf was hosted by Bob Clarke.  Pat is General Manager of Bannister Honda.  He talked about the effects of Covid-19 & supply chain issues on his dealership, & the automotive industry as a whole.   Covid restrictions initially brought auto sales to a near standstill, resulting in a gradual layoff of near 80% of his staff.  Industry-wide, auto sales & dealer orders of new cars dropped precipitously.  At the same time, production at factories worldwide also dropped dramatically, either because their workers were sick or prohibited from working, or because they couldn’t get parts from their suppliers.  Supply problems are particularly difficult with semi-conductors (the small computer devices than run our electronics), as those factories dialed back production, & continue to have serious problems catching up with demand.  The loss of a major Texas resin plant, due to a storm, & a closed Chinese smelter are particular problems.  Most semi-conductors come from Asia, where factories are beset with a shortage of energy.  The loss of automotive production & parts capacity translates to largely empty lots at dealerships.  All dealers are competing with each other for scarce supplies of both new cars, & used cars, typically sold at auction.  Auction prices now often exceed recent retail prices, so buyers are seeing big increases in the value of their trade-in, & even bigger increases in purchase prices.  Additionally, some repairs are delayed for months, waiting for scarce parts.  Pat says the auto sales business model is moving toward online sales, but dealers still want to have product for consumers to see, touch & drive, before they make a decision to buy.  The impact of electric vehicles, & the way they’re sold & serviced, will also profoundly affect the industry.