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OC car dealerships overcome pandemic speed bumps

Supply chain issues have plagued auto dealerships with low inventory levels and empty lots for more than a year.

“At this time of year we would usually have around 400 new cars in the field. [Now,] we have 33,” Theodore Robins Ford co-owner david robins told the Business Journal.

“Demand so far exceeds supply due to all kinds of disruptions. It’s not just chips. It’s resins, steel, all kinds of different supplier issues that are preventing builders from figure out which cars they can build each week at those factories.” Wilson Automotive Group President Craig Whetter added.

“I have never seen anything like it in my many years in the business.”

Despite the headwinds, revenue for Wilson Automotive, number 7 on the Business Journal’s list of OC’s top private companies (see list, page 32), rose 27% to $3.2 billion.

Other Orange County auto dealerships have also rebounded from the hit they took during the height of the COVID-19 crisis.

Tuttle-Click Automotive Group#19 on the list, surpassed $1 billion in revenue, growing 18%, and based in Irvine Shelly Automotive GroupNo. 24 on the list, saw its business grow 50% to $882 million last year, surpassing the company’s pre-pandemic numbers.

“Every business in my industry has experienced the drop in sales during COVID,” Founder of Shelly Automotive Damon Shelly told the Business Journal. “We have recovered in 2021 to roughly normal levels.”

Procurement activity

Shelly Automotive officials attribute most of the company’s 50% revenue growth to the two Bakersfield Toyota dealerships it acquired in late 2020.

Because “2021 was the first full year with the [acquired] dealerships,” the jump in revenue from 2020 is relatively high, Shelly said.

The company reported organic growth of around 10% in sales volume, he said.

It’s not the only dealership group reaping the benefits of its 2020 acquisitions.

Wilson Automotive officials attribute much of their 27% revenue growth to its Claremont Toyota acquisition.

The company acquired the dealership in late May 2020. The following year not only saw its first full year with the new dealership, but also pent-up demand from 2020, Whetter said.

Pay reductions

As OC car dealerships rebounded in revenue, they saw a decline in local payrolls.

The number of OC employees at Shelly Automotive fell 9% to 231, a result of the company’s efficiency, Shelly said.

“We’re a little more careful with how we’re hiring right now,” he said. “We are constantly looking at whether we have too many people and how to become more and more efficient.”

Wilson Automotive’s 2% decrease to 1,079 employees is the result of employees leaving voluntarily.

To ensure that all of its employees retain their jobs during the COVID shutdown, “we [accepted] we would not be profitable. Our people are our most valuable asset, so they come first,” Whetter said.

CEO David WilsonThe “formula is: take care of your employees, and they will take care of the customer.”

“He has 2,100 families to worry about and he’s not going to put them in a difficult position,” Whetter said.

Presale Pivot

As demand for cars exceeds supply, dealers pre-sell their vehicles before they even hit the lot.

“Anything we get, within a month, 90% to 95% of it is already sold,” Robins said. “We actually like the business model. We don’t have to carry around this huge amount of inventory, which is very expensive to do. »

Customers can also order the exact model they want, Robins said. They don’t have to ‘pick and choose what we have on the pitch’.

However, delivery times for pre-sold vehicles may vary.

“Typically, around 60 days are already planned out,” Whetter said.

“We have to tell people that if they want something really special, they have to wait until we can secure that production. And sometimes it’s for more than 60 days” for special features.

As manufacturers wait for inventory levels to normalize, Shelly says dealers “really have no choice but to wait for them.”

“They are the ones who have to solve the problem.”

Automaker uncertainty

Automakers are just as uncertain as dealers about when the industry will see an end to shortages and supply chain issues.

“I hear that things should improve by the end of this year, but no one really knows for sure,” Hyundai Motor America Senior Vice President of National Sales Randy Parker told the Business Journal.

The shortages led to a collective drop in sales for OC automakers last month.

Irvine-based operations of Mazda reported a 64% drop in May sales from a year earlier. Company officials cite low inventory levels and the recent COVID lockdown in Shanghai, which has tightened parts supply and impacted production.

Based in Irvine Kia America said it saw a 28% drop in May sales, while Fountain Valley sales hyundai were down 30% for the month.

Although the numbers are down, demand isn’t the problem, Parker said.

“Everyone is going to be down just because we don’t have enough microchips,” he said.

“Year on year it looks like pessimism…but we are gaining market share and hitting all of our internal targets.”