What's wrong with this picture? Here at the NADA convention, dealers and consultants are sounding alarms about expanding inventories, rising incentives, shrinking margins and the notion that a cyclical industry has reached the top of another cycle.
But while dealers were sitting in make meetings in Las Vegas, more than 250,000 consumers were lining up to throw $1,000 deposits at Tesla for its Model 3, a new car that likely won't be delivered for at least 18 months.
Every one of those deposits is a free loan for Tesla. Those Model 3s, when they arrive, will have no incentives, no floorplan expense, no advertising costs.
How ironic that an upstart car company is fulfilling the dream of decades of auto executives to fundamentally change the way Americans buy automobiles.
Decades after auto executives first tried to spark a European-style build-to-order business model, new-vehicle sales in the U.S. are still bound to a costly system that requires acres of vehicles in stock.
Automakers last month reported their highest unsold inventory levels -- 3.8 million units -- since June 2006. That's over $100 billion in assets sitting on lots around the country, being floorplanned and requiring incentives to attract buyers.
Ben Waller of U.K. consultant ICDP, which studies vehicle distribution trends, estimates the build-to-order rate in the U.S. at 6 percent.
Contrast that with Europe, where about half of new-car buyers pre-order their vehicles and wait for them to arrive. That means most dealers over the pond don't stock large inventories, allowing smaller dealerships to get by with less overhead.
And by being able to judge the relative strength of their products with sold orders, European automakers can better manage assembly plants so that supply and demand don't get out of whack, experts there say.
Yet the chances of the U.S. market shifting to more of a build-to-order system remain slim.
"Inventory is not just an interest expense, it is advertising," says Bob Shuman, owner of an FCA dealership in Walled Lake, Mich. "If a guy looks in the paper and sees I have 20 [minivans] and another guy has 60, where's he going to go?"
Eric Lyman, chief analyst and vice president of industry insights at TrueCar, said: "I think we're moving in a direction that works against the idea of build-to-order. Look at Amazon Prime," where consumers pay annually in part to get their purchases delivered faster.
"Even if you could reduce [wait times] from six to eight weeks now to a month, is that enough given the moving target that we are creating with technology and other things in our life to deny instant gratification?"