"In other words, when everybody can order everything they want, and every Ford dealer has that F-150 SuperCrew XLT, we all beat each other to death to get that customer's business," said Keating, whose group has 19 stores in Texas. Now, customers in the market for a new pickup will not find as many choices. "And so when the customer searches the Internet for the purple with pink-polka-dot-interior F-150, they only find one," Keating added. "And they go in, and they buy it."
Hence the rising average gross over the past several weeks.
"It is a very imperfect analogy that new cars in July are as scarce as toilet paper was in April in grocery stores," said Tyson Jominy, vice president of data and analytics at J.D. Power.
As a result, average grosses and average selling prices are trending up since the height of the coronavirus-shutdown period — at a time of year when they would normally be trending down, Jominy said.
For the week ending July 12, the average vehicle sales price as a percent of sticker price was 95.8 percent, compared with 93.5 percent a year earlier and 93.2 percent for the week ending April 19.
When automaker incentives were included, the figure was at 87.7 percent vs. 85.4 percent a year earlier. It's also up from a trough the week ending April 19, when it was just 83 percent.
"If you're not confident that there's going to be another vehicle coming anytime soon to replace the one that you sell, you hold for gross," Jominy said. While pickups and SUVs are notably in high demand, grosses have been up across all segments, he said.
AutoNation Inc., releasing its second-quarter results last week, said same-store gross profit per new vehicle jumped 22 percent from a year earlier to $2,194, driven by inventory shortages. Same-store gross profit per used vehicle rose 23 percent to $1,801.
At the end of the second quarter, the nation's largest new-vehicle retailer said, new-vehicle inventory was down 41 percent, or by 26,400 vehicles, from the same time in 2019. AutoNation's used-vehicle inventory also is tight, as demand outpaces supply.