By the Numbers As Chip Shortage Goes On, Cars Are Scarce and Prices Are Up
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AUTOGRAPHICS' June 2021 AutoGraph’s Automotive Report 1 VOL 34, NO 1 www.AutomotiveReport.net JUNE 2021 MonthlyMonthly News for News the Automotive for the Enthusiast Local working Automotive in the Automotive Industry Repair Industry. By the numbers AutoGraphicRetro Release: Publishing 35th Anniversary Company Edition As chip shortage Getting1121 a Airport look at Centerof the 1990Drive Ford Thunderbird• Suite - 10114 • Nashville,goes on,TN cars37214 what’s happening out there by check- are scarce and ing automotive repair prices are up industry stats and trends By Tom Krisher DETROIT — For the next few months, By John Yoswick Charlie Gilchrist figures his 11 car deal- erships in the Dallas-Fort Worth area will The past 16 months have been unusual, sell just about every new vehicle they can to say the least, but to help you get a han- get from the factories — and at increased dle on what’s happening in and around the prices. industry, here’s our annual collection of In normal times, that would be cause for stats and trends impacting collision repair- joy. Not so much now. A global shortage ers. of computer chips has forced automakers Backlog still on the light side, but return- to slash production. The result has been ing far fewer vehicles on dealer lots, just as “This is the most backlog we have had the waning pandemic has fueled a pent- in nine months,” the owner of a multi- up consumer demand for cars, trucks and location collision repair business in the SUVs. suburbs of Philadelphia wrote in January, Given the robust customer demand, as the national scheduling backlog rose for dealers like Gilchrist could sell many the third consecutive quarter to an average more cars and trucks, if only they had of 1.6 weeks at the start of this year. But more. Even at elevated prices — the aver- that was still the lowest average for the age new-vehicle sales price tops $40,000, first quarter in any of the past four years, up nearly 10 percent in two years — cus- according to tracking by CRASH Network, tomer demand exceeds supply. leaving many shops uneasy. “It’s pretty evident when you pull onto “It’s on the edge, where we could add our lots that there’s not much selection,” staff, but we are seasonal here and want a said Gilchrist, whose lots carry brands little more backlog [before we] make that Shop Profile: ranging from General Motors and Ford to move,” a shop owner in rural Montana Nissan and Volkswagen. “Our (sales) vol- wrote. Crotts Garage & Collision Repair - 22 ume is falling because of the sheer lack of The survey results show that shops’ inventory. It will still fall during the next backlog of work in January had risen from two or three months.” just 1.3 weeks at the beginning of the The across-the-board surge in auto fourth quarter of 2020, but are still below prices contributed mightily to last month’s the 2.3 weeks of backlog that has been the jump in U.S. consumer prices, the gov- first quarter average since 2017. About ernment reported last month. A record 10 19 percent of shops reported they had no percent increase in used vehicle prices, backlog in January and could schedule new in fact, accounted for roughly one-third work immediately. That is an improvement of April’s overall rise in consumer prices from the previous quarter when 24 percent — the sharpest monthly increase in more of shops had no work scheduled ahead, and than a decade. far better still than the early weeks of the Ford expects to produce only half its pandemic last April, when 57 percent of normal number of vehicles from now shops had no backlog of work. through June. GM and others have re- Looking at the latest data by region, sorted to halting production of some cars the Southwest reported the least backlog, and smaller SUVs and diverting com- half of what was “normal” in recent years. puter chips to higher-profit pickup trucks Shops in New England and the Pacific and large SUVs. Leading automakers are Northwest had backlogs that are only about Rear View: warning of diminished earnings. 60 percent of the typical first quarter levels. The vehicle scarcity and the soaring - 38 The South, Midwest and Mountain regions 1949 Vollswagen Hebmuller prices can be traced to the eruption of the Continued on page 6 Continued on page 10 What’s Inside: Lease or purcahse when it comes to adding locations? - 4 Senator urges tough US rules barring gas-powered cars by 2035 - 21 Edmunds: The top off-road vehicles for 2021 - 8 Using voltage drop testing to diagnose a problem circuit - 26 Recalls: Compiled from AP, OEMs, EPA and NHTSA - 12 Police: California Tesla driver riding in backseat arrested - 30 Biden plan would pick winners, losers in move to green jobs -16 Racing Notes: Ex-NASCAR driver Eric McClure dies at 42 - 35 2 AutoGraphic’s Automotive Report June 2021 Area’s Largest BACHMAN Supplier of AUTO GROUP Genuine GM Parts! Hotline for Bachman Parts Center 800-334-3041 502-491-3662 9650 Bluegrass Parkway Louisville, KY 40299 Daily Delivery to Louisville, Lexington, Cincinnati and Southern Indiana! 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Monthly News for the Local Automotive Industry Monthly News for the Automotive Enthusiast AutoGraphic Publishing Company By John Yoswick play,” while larger MSOs consider “effi- working in the Automotive Repair Industry. ciency of capital” — what will get them a 1121 Airport Center Drive • Suite 101 • Nashville, TN 37214 Here’s a tip: Investors might be inter- greater financial return. VOL. 34, No. 1 • June 2021 ested in buying your shop’s real estate. “There’s no right or wrong,” said Chou, Gary Chou, executive vice president as long as someone purchasing considers of commercial real estate brokerage firm whether they would do better freeing up Editor Matthews Real Estate Investment Ser- that money to open additional shops. Barry L. Forkum vices, says that outside investors such as Will Johnston, chief corporate develop- real estate investment trusts (REITs) have ment officer for Service King, agreed that [email protected] recently begun to see collision shop prop- there’s not one definitive answer to the erties “as a legitimate investment product.” purchase-versus-lease question. “That’s helped push values of collision “It really depends on where you are in Publisher / Advertising Director properties up, because it basically increases your growth and how aggressively you’re the buyer pool overall,” Chou said. growing,” Johnston said. “You may decide Garnett Forkum Chou was speaking as part of a panel that your pace of growth is such you want discussion focused on issues related to to lease that property because you want to collision shop real estate, with topics that save capital to go after additional shops. IT & Art Director could be equally of interest to multi-shop But if you’re growing with brownfields operators (MSOs) and single-location col- and take-overs and will be adding a lot of Allen Forkum lision repairers. value to the facilities you take over or that The new interest among investors in you build, you may want to benefit from body shop real estate, for example, offers the value [in the property] you put in there Copy Editor another option for a shop owner who sells as the operator.” the business to a large MSO — which is The terms of any lease can be very Tom Williams unlikely to want to buy the real estate — important, Johnston said, particularly when and wants to cash out the property rather you decide to sell your business.