le Mercredi 29 mars 2023
le Lundi 1 août 2022 8:25 Économie

Local Automobile Dealerships In Limbo

Title may be inaccurate when specifying ‘local’: in fact, a significant number of dealerships’ car lots, all over the province, the country, the US and beyond, show important ‘vacancies’ and have done so for a lengthy period of time, in fact, since the pandemic’s consequences kicked in and resulted in the scarcity of new and essential components for new vehicles, especially and mostly semiconductors, and usual replacement parts for used vehicles.

Those ‘chips’ as they are commonly called, are a little bigger that the size of a quarter; they are tiny transistors made from silicon which is found in most of the minerals on earth’s surface; they allow computers, cellular phones, appliances and other electrical devices to function; motor vehicles use them too. Raw materials for the semiconductor business often come from  Japan and Mexico, while the chips are manufactured in China, Taiwan, South Korea (+80%  of world market) and some in the United States. The chip shortage is a direct result of the pandemic, which increased demand for personal electronics such as cell phones and laptops so much so that production could not keep pace with demand. Depending on model, some car models can use a few hundred chips to activate complex electronic systems!

General Motors CEO Mary Barra was quoted stating that the shortage could cost GM in excess of 2$ billion in lost earnings this year; she expects chip supplies to return to normal in the second half of 2022. AAI, a trade group that represents automakers, said the chip shortage would result in producing less than 1.3 million vehicles in US alone! Many automakers have stopped production of some vehicles in their factories, others chose to carry on with production and to ship vehicles to their dealers who just park them on their lot until chips become available, then installed and then marketed and sold. But in the meantime, supply stands at an all-time low.

MARKETING 101!  These last twenty years or so, our local dealerships have chosen to join a global trend in regrouping their buildings, sales and services in an ‘auto-mall’ concept: finance specialists call it ‘the economies of agglomeration’: even though being grouped together increases competition, it makes the shopping experience more pleasant for shoppers who can find all products in a limited destination;  it also makes more sense to rival dealerships to take advantage of a larger customer base and potential: it’s up to dealers  to treat customers fairly with the consequence that if they don’t, buyers will move next door, and from door to door until they find what they want at the price they can afford to pay. Competition is good for business, dealers and customers, it’s a two-way benefit.

Situated at the far north-east section of Hawkesbury, Tupper street regroups the Nissan, Hyundai and Toyota banners as next door neighbours, while less than a kilometre south on Regional road 17, the Ford and Honda dealerships joined forces while expecting Kia and GM’s to soon build new garages, all within walking distance; local Chrysler/Jeep and Mazda dealerships are both very well located on in-town main commercial streets where traffic is intense. Some automakers are not yet represented in the Hawkesbury automobile profile (Volkswagen? Subaru? Tesla?) but may soon decide to join the local parade. For local customers to be able to shop local, they have to buy local: your business encourages large and small banner car manufacturers to offer their services locally. What sensory pleasures are there from buying a car online, seeing it, touching it, smelling it, listening to its many sounds…? The experience is not the same, it’s missing ‘something’. Keep the ball rolling LOCALLY: shop local, buy local!

CHIPS, THE SEQUEL… When sending this article to our reliable proof-reader, she pointed out that there is also a significant ‘chips’ shortage in grocery stores and dépanneurs… I guess we just can’t wait to get our chips back, can’t live in a world without ‘chips’!