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The Pandemic’s Impact on the Car Industry

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Since the pandemic began, we have seen a lot of things change. The automobile industry has been noticeably affected. Angela Beddoe sat down with Maria Dunning, Market President, Albany Auto Group, to discuss the current dynamics. 

AB: What did car dealers experience as a result of the pandemic?
MD: When we closed down in March 2020, at first, only service departments were able to remain open as an essential business for parts and service, and after an industry effort to educate decision makers, the entire automobile dealership was categorized as an essential business. With that designation, we were able to sell and deliver vehicles without personal contact at first. Several months later, we were able to greet clients in our facilities by appointment only and then we ultimately opened up with all necessary COVID-19 restrictions in place. Today, we are business as usual while still complying with all mandates required by regulatory authorities. 

AB: How come we see dealerships with hardly any cars? What is the reason behind the supply chain issues?
MD: There is a microchip shortage. These are chips for the computers in your car; they enable everything from your car’s transmission to your car keys, to name a few. There are a variety of chips that go into a car that are not being manufactured at enough volume so that the supply is not able to meet the demand. There are a variety of auto supply chain items besides chips that are also on delay depending on the manufacturer, including sunroofs, doors, oil, transmissions, radios, etc. It depends on the vendor and also on the route the vendor uses to reach either the plant or a dealership. For example, in Southeast Asia, because of COVID-19, plants have shut down and when they reopen, they often reopen at reduced capacity. Or if a part is being delivered via truck, since we have a shortage of truck drivers, many items are backed up at ports because we don’t have the necessary number of truck drivers to move that product from the port to where it needs to end up, resulting in our waterways being backed up as well. Ultimately, often times the end user is not receiving the products they need in a timely way. And this supply chain issue is not unique to the automobile industry; you see it in drug stores, grocery stores and online ordering as well.  

AB: How is Albany Auto Group addressing this challenge?
MD: We are reaching out to our client base earlier then normal, particularly if a client is in a lease. We are advising them well in advance of the lease maturing to decide if they want to buy a new car, extend their current lease or go into a new lease with a different vehicle. If a client wants to buy a new car, planning well in advance assures that their desired vehicle is awaiting them when their contract expires.

The other decision we have made is, for the most part, we are selling cars only to our immediate market in the Capital Region. Our community comes first. Pre-COVID-19, we did a lot of business outside of our market as well. With limited inventory, we want to make sure that our customers in the communities we serve are our priority and have access to the cars they want. 

AB: How are you enhancing the inventory on your lots?
MD: We are keeping most of our trade-ins and reconditioning them to ensure they meet our quality standards and we are selling those cars as well as our new cars. We are also taking a lot of extra effort to acquire, re-condition to quality level and sell cars, even with higher miles, to meet demand.

AB: The dynamics of making a car deal for the consumer has changed. Can you explain what has changed?
MD: Although brand loyalty programs are still around, rebates are not as widely available. The customer who is currently driving a car they own or lease is in the best position; that car has never been worth more money than it is now. Even if new car or pre-own certified car prices are higher, the vehicle they are currently in is also at a higher value and with financing rates being so low, the consumer has an advantage and frequently people are able to upgrade their car and often times not increase their monthly payment or see a small increase. 

AB: Any additional thoughts for car owners?
MD: PLAN AHEAD! For everything; whether it’s getting a new or used vehicle, service for snow tires or oil changes, everything is taking longer.