Carson City Room Manager: Pass the tokens please, I need a new car | News from Carson City, Nevada
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Is it time to trade in your car for new wheels so you can see the United States in your new Chevrolet? Or how about that 460 horsepower Mustang 5.0 GT you wanted so badly? Ah, the F-150 would be the perfect truck for those big jobs. Or, the reliable Hyundai with the 100,000 mile warranty that could outlive you?
If you’re in the market for a new car, you might get more than a sticker shock because the choices can be slim and what you see in parking lots today is what you get. Or you can order your dream car with all the features and maybe wait a year for delivery. Some of the pre-ordered 2020 models have just been delivered. Until a pre-ordered car reaches the dealership, the sale is not finalized.
It was also quite the race for local dealers.
Tim Hohl, one of the owners of Michael Hohl Automotive who has been in the industry since 2006, says: I’ve never seen one in my life.
Today, the experience of buying a new car is quite different for both buyer and seller than it was even in 2020 at the height of the pandemic. Carson City new car dealers – featuring 14 models – are experiencing a major shift in car sales, with used cars now selling like hot cakes.
If you have a good used car, now might be the time to unload it, because you’ve never sold a used car for such high prices. Instead of advertising trades welcome, dealers are now announcing that they will buy your used vehicle in the hopes of keeping their doors open until new cars arrive. Hohl quotes: “We use Kelly Blue Book, the industry standard for used car pricing, shows that used cars are now worth more than when they were new, and what was once an asset in depreciation allows homeowners to earn money instead of losing money in this current buying frenzy.
If used cars sell for more, so do new cars. There isn’t much negotiation although Hohl says their dealers are fair in their prices as they are a local dealership and want to maintain their reputation as a hometown dealer who cares about their community. He proudly declares: “The Hohl family has deep roots in this city. My brother Matthew and I were born and raised in Carson City and graduated from Carson High. Tim graduated in 2004 and Matthew in 2000.
Like just about everything else associated with the pandemic, this has been complicated reason after reason for today’s shortage of new cars. First of all, there are the sudden closings of factories forced by the economic shutdown. This was followed by sluggish sales due to lack of demand as workers were confined to working from home.
To regenerate demand, low-cost financing options were introduced, so dealerships sold most of their cars. Closed factories revamped to make medical protective equipment, including ventilators instead of making cars. When the lines got ready to produce cars again, there was a lack of auto parts and more emphasis on SUVs and trucks. Today, it is the shortage of microchips that prevents factories from fully producing.
Almost everything in homes today contains microchips, integrated circuits – which are not interchangeable. The increased demand for computers and other personal equipment needed by employees to work from home has compounded the shortage. Global chip production simply cannot meet demand.
Cars today can hold over 3,000 chips to power all the electronics. Although it may sound like a lot, global automotive chips only account for 3% of sales for Taiwan Semiconductor Manufacturing Company, the producer of 70% of automotive chips in the world. Currently, it takes around 26 weeks or more for the necessary chips to be delivered.
Still, the current shortage of chips could be alleviated. You’ve seen the sticker on computers, “powered by Intel”. In April, Intel announced that it could enter the automotive chip market within six to nine months. Experts say as some new cars hit dealerships, the global shortage may not end until mid-2022.
John Napoleon opened his Carson City Hyundai dealership in 2018. He says his sales have been “in line with last year” with used cars selling well and after-sales service busy. He added, “The Hyundai Alabama plant has also shut down and is now only operating at 70% capacity, causing delivery delays, but not as much as other automakers.”
As a longtime veteran of auto sales, he remains optimistic about the industry’s recovery, although it may take some time for automakers to catch up with demand. According to Hohl, there was a strong demand for new cars that could not be met even before the pandemic.
If you’ve traveled along South Carson City where most new car dealers have showrooms and lots, you will have noticed the lack of cars on the once full lots. Capital Ford is almost devoid of cars. Ford has been hit the hardest by the chip shortage. The Toyota dealership now has used cars featured in the front row, once showcasing the latest new cars. The Nissan dealership has a large banner on the front of the house that says “We buy used cars”.
The largest component of the Carson City retail market is car dealerships, as they generate about a quarter of the sales tax deposited in the city’s general fund. And it’s not just locals who buy cars. As a regional mall, Napoleon says about 60% of its sales come from outside of Carson City, with the remaining 40% coming from Carsonites.
With a lower overall sales tax, friendlier service, and a hometown atmosphere, Carson’s auto dealers are well positioned to continue serving residents and businesses in the area and the region and to overcome another challenge. imposed on retailers as they struggle to return to forward-pandemic levels. Fortunately, service departments continue to generate much needed income to pay for overhead costs.
Until new cars fill the car lots again, take care of this suddenly appreciating asset and keep it well tuned.
– Ronni Hannaman is the Executive Director of the Carson City Chamber of Commerce.