VAST: DEMAND IS HIGH – SUPPLY AT NEW LOW
Plant shutdowns, chip shortages, supply chain snafus, slow returns to work – this confluence of events has created a situation that is now affecting each and every dealership out there regardless of brand or type of customer. And it looks like the continuing reduction of available inventory will not magically fix itself in the near future.
There have been lots of articles and deep discussions about the retail inventory situation, including how we got here, why we are staying there, and what it means to dealerships, but in this article, we are going to focus on Commercial inventory challenges. We will list the best strategies we have heard to help you hang in there: where to find inventory and how to help your customers that just-can’t-wait.
First let’s put the current inventory situation in perspective. Inventory flow is not always what we’d like it to be. In 2018 there were some hiccups in the commercial industry that meant that the various OEMs had challenges keeping up with demand – from GM’s gap between model years, to Ford’s Mexican Plant fire, to RAM’s components delays. It was interesting to watch the on-lot average volume drop 20% by from the first of the year to midyear, and then not fully recover until March of 2019.
Fast forward to early 2020 and inventory levels had fully returned, in fact were 14% higher than the 2019 average…and then COVID hit. Starting in March 2020 we watched as inventory levels on dealers’ lots started dropping: 5%, 8%, then 10%, then plateaued for a few months at 25% of the March numbers, then averaged another 2-3% per month drop to 12 months later, and in March of 2021 stocking levels are down 40% year over year.
By the end of 2020 restocking became a tap dance to the OEM’s songs of woe [with a side of chips], and bailment pools started drying up as well. Now we hear about rubber and silicon shortages. Most dealers we have spoken to have already sold any incoming orders.
Navigating the Inventory Shortage
So today how can a FordPro find help when a customer comes in needing a vehicle to keep their business going? Here is a list of the top approaches that we have heard in coast-to-coast conversations about this unique situation:
There are still a few hidden caches in some bailment pools – typically at smaller upfitters who do not have postings online. If you are a one-man-band it is tough to make even more calls, so see if you can get any help at the dealership calling around – sending emails just may not be enough.
Dealer trade seems a tough path to take at this point; everyone is experiencing fear from low inventory and uncertainty, but consider that this is a good time to think through how you might create friends for the future. Take a look at your inventory and if you have anything older than 200 days on lot, proactively leverage it in a trade to help serve a customer in need now, and maybe make a new collaborator in the process – a strategically sound approach.
Stay in communication with your CBM – ask them for help, ideas, where they see trade opportunities, coaching…make sure you are aware of all order deadlines, and options, and be aggressive if you have allocation available – demand will continue to build, inventory will continue to drop, and prices and margins will keep rising.
Targeting the right customer is also an important tactic for our current situation. Look long and hard at what inventory you do have now, and what you expect in the near future, then work at zoning in on the right vocational fit. Right fit will be different for each market, each dealership, each inventory on lot status, but thinking this way – maximizing the value to customers by their business needs – is not only a great way to manage the current low inventory, it’s a great discipline to develop for the future as well.
Although this inventory situation is one of the biggest challenges to face the commercial sales person ever, take advantage of it, lean into it and learn…
Work Truck Solutions just announced (first!!) to the National Ford Truck Club they have launched VAST (Vehicle Acquisition Search Tool) to help dealers find and acquire the inventory needed to serve their commercial customers.
VAST is the commercial vehicle industry’s first and only tool to offer access to a wide range of inventory sources for the wholesale acquisition of trucks, vans and very soon sports utility vehicles for a one-stop-shop experience. Work Truck Solutions’ goal is to eliminate the time you have to spend to attend online auctions and search through numerous sites that often don’t show upfit details. By providing their structured data they believe you will spend more time serving your customers rather than searching.
VAST has started off with inventory from a number of initial partner sources; rental companies and auctions, and will be quickly adding fleets, fleet management companies, OEMs, finance companies, and bailment pools all onto one platform. Dealers need inventory to sell, so if you are interested in learning more about this revolutionary and timely tool, contact Work Truck Solutions at [email protected]