A storm, an election and Europe all might impact inventory

Other blogs
Related Topics

Peculiar times are making some otherwise-confident dealers uncertain about the future -- specifically, the impact of various world events on their future days supply of inventory.

There are three issues that might impact inventory. The first is the aftermath of Hurricane Sandy; the second is the U.S. presidential election results; and the third is the economic struggle in Europe and China.

Sandy has taken her toll on the East Coast, and it's a big one.

According to data from Urban Science, 7 to 8 percent of U.S. car sales come from the New York City, Long Island, northern New Jersey and part of Pennsylvania region. That means about 3,000 to 3,500 vehicles a day are sold in those areas.

Many dealers with stores on the East coast are still assessing the damage to their inventory today. As they do, it begs the questions: How much inventory will they need to replace vehicles damaged by the storm? What kind of demand for vehicles will dealers face? And what will the buying mood be among devastated residents in those areas as they recover?

Those answers are unknown.

Enter another unknown, the presidential election. Some dealers in other parts of the country are holding off ordering additional inventory until after the election, according to a post on the Ethical F&I Managers Facebook page. The post says some dealerships are nearly out of stock.

These two factors could cause problems for manufacturers.

If East Coast dealers must restock quickly because of Sandy's damage and other dealers suddenly need stock after the election, manufacturers are going to feel a production pinch.

But dealer Bill Cariss is not worried about either of those issues impacting him.

He has been ordering inventory as usual. And the seven New Jersey dealerships owned by Holman Automotive Group, where Cariss runs the dealership operations, weathered Sandy with minimal damage.

For Cariss, there is a greater potential worry that could impact his inventory.

"I think the bigger impact is going to be this slowdown in Europe and China." said Cariss, vice president of Holman Automotive Group dealership operations in Maple Shade, N.J. "We are probably going to see increased levels of inventory in the U.S. because the manufacturers will ask us to take more product, which can be a blessing and curse."

So batten down the hatches, because with these uncertainties, there could be another storm brewing that hasn't even struck yet.

You can reach Jamie LaReau at jlareau@crain.com. -- Follow Jamie on Twitter

Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

Or submit an online comment below. (Terms and Conditions)