Auto dealers begin feeling their own microchip crisis

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The sales challenges are not universal among brands. Supply chain problems have been particularly vexing for American Honda Motor Co. in recent weeks, and the automaker was forced in March to idle its plants in North America. But Honda and Acura dealers report that vehicle supplies are only critical for particularly hot models, such as the Acura MDX crossover and the Honda Ridgeline midsize pickup.

The Ridgeline, which generally carries a higher sticker price than its more popular American rivals, has suddenly become very competitive, because of its boxy new looks and the scarcity of competitor models that, in normal times, would come with discounts, said William Feinstein, chairman of the Honda National Dealer Advisory Board and president of Planet Honda in Union, N.J.

But he said that he also wishes he could get more of Honda’s larger crossovers, such as the three-row Pilot.

“It’s definitely tight,” he said, and “likely to get tighter in the near term. But we haven’t seen cancellations of orders. We’re just seeing production times slip by a week to three weeks. We seem to be in better shape than some OEMs.”

Sonic Automotive Inc. President Jeff Dyke said he’s a big proponent of manufacturers keeping inventory leaner, since the tighter supply means fewer incentives for automakers and higher gross profits per vehicle for dealers.

“It’s made the manufacturers a lot more money and it’s making the retailers a lot more money,” Dyke told Automotive News.

Sonic, the nation’s seventh-largest new-vehicle retailer, so far has not been impacted much by the microchip shortage, Dyke said. But he sees that changing over the next several months.

“I think that we’ve got a little bumpy road [in] April, May, June, July-ish,” he said. “I think inventories are going to get tighter. If you have a typical 45 days’ supply right now of new cars, it may go down to 35. It’s going to get tighter. But I think the margins will help offset the reduction in what we have on the lot.”

While pressure on popular crossovers continues to be a concern across the industry, the variety of models even within a single brand often means that there are choices for a shopper who is willing to move a segment up or down, Jominy said. However, pickups — mostly full-size models but also midsize alternatives — offer fewer choices. And inventories of both segments are quickly being whittled away.

“Pickups are like little bricks of gold,” said Will Churchill, dealer principal at Frank Kent Motor Co., with Cadillac, Chevrolet and Buick-GMC stores in Fort Worth, Arlington and Corsicana, Texas. “The higher-contented stuff seems to have higher pressure on it than the lower-contented stuff. But it all has pressure on it. We’re down to eight half-ton crew cabs on our lot. Normally, we probably have 50.”

Melissa Burden, Hannah Lutz and Michael Martinez contributed to this report.

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Saurabh Shukla

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