How We’re Helping the Vehicle Inventory Shortage
Supply chain disruptions have led to the current shortage of new vehicle production, but not for the reasons you may think, such as a decrease in steel and an increase in prices for manufacturing it. This does play a role in the crisis, but the biggest issue facing the industry now is a lack of semiconductor chips, the “brains” of modern vehicles.
When the pandemic started, manufacturers assumed there would be a huge drop in new car demand. Orders for chips were canceled alongside anticipated reduced sales, and the resulting backlog is affecting the auto manufacturing industry both now and in the foreseeable future. This lack of foresight in the automotive industry led to increased demands for these microchips, with nowhere near enough chips being produced to meet the demands.
All of this means many buyers, if they can find a new car on dealership lots, are faced with sticker shock and very little negotiating power for purchasing new cars. These buyers are now turning to used cars, driving demand in this market, too. The automobile inventory shortage is sending dealerships into a crisis mode that’s not expected to lift any time before the end of the second quarter.
Helping Dealerships Navigate the Vehicle Shortage
At Bay Motor Finance, we’re finding ways to supply used cars to dealerships, from selling repossessed vehicles to our partners to scouring auction sites and making our dealership financing options more inviting.
Supplying Repossessed Cars to Dealerships
One unfortunate aspect of auto financing is borrowers defaulting on the loan, leaving us no choice but to repossess the vehicle.
We sell these repossessed vehicles to give inventory back to dealerships, allowing the dealer to get inventory at a better price and for a better sales profit. These vehicles are priced below what dealers can find at auctions, allowing the dealership to get inventory at a better price and sell them for an increased profit.
Bumping Up Mile Caps
While most finance companies cap mileage at 100k for financing approval, we’ve increased this cap to 120k miles.
By bumping up the mile cap, dealers can purchase higher mileage vehicles and still have the option of financing through us. This means a bigger selection of cars for dealership lots.
Backend Flexibility for Partners
We understand that the inventory shortage means the dealer is buying units at a higher price, which can affect their front end gross. We’ve increased our backend amount to allow dealers to make a profit. By upping this amount, the dealer now has a way to recoup some of their losses on the backend.
Bay Motor is Out and About
We are regulars at auto auctions now, looking for dealerships who could use a little help getting through the inventory shortage. Look for us at your local auction, or contact us now to see how we can help you manage this crisis. At Bay Motor Finance, we’re here to help.