Q. What are the best practices for fleet managers to follow to acquire new vehicles in a supply constrained environment?
Here are a few best practices that we recommend...
A. Great question. Production is wrapping up for the 2022 model year. We expect the original equipment manufacturers (OEMs) to finalize their model year 2022 production plans, including their remaining order cancellations, by the early fall of 2022. This being said, production plans for the 2023 model year are simultaneously ramping up. Overall, we are seeing that production timelines are generally longer for the 2023 model year compared to the 2022 model year when supply constraints were at their peak. However, we continue to see the OEMs adjust their production plans due to ongoing supply constraints in the industry.
Dealer inventory has been slowly improving over the past few months, with an increase of about 15% since January 2022 (Source: Wards Auto). We expect to see this trend continue in the months ahead and through the fall of 2022. At this time, we do not expect dealer inventory to return to “normal”, pre-pandemic levels for a few more years. Part of this strategy is intentional, as dealers no longer have an appetite for holding high levels of inventory on their lots – which is a costly practice for their business. Therefore, dealers and OEMs are trying to find the right balance between having enough inventory for their customers while also keeping inventory holding costs to a minimum.
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Assistant Vice President of Vehicle Acquisition
Here are a few best practices that we recommend...
While sourcing constraints have improved over the last year, there are still challenges that are restraining production from returning to pre-pandemic levels...
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