Demand beats supply


In March 2019 the world changed completely. The Covid-19 It almost paralyzed activities around the world when different countries made the decision to order lockdowns on their citizens in order to stop the level of contagion. Automotive industry It began to suffer from production problems, which were followed by product availability problems and, shortly after, were joined by other effects caused by the pandemic that generated a shortage of semiconductors and a crisis in global logistics.

Almost two years after the closure of activities in our country, both brands and car dealers and customers continue to suffer from the negative effects.

For Reginaldo Soto Pineda, General Manager of Volkswagen Fersan and Seat Navarra Motors, the market changed drastically, “it has led us to implement actions totally different from how we had been working before those 2 years. The automotive industry had a 180-degree turn to the extreme that whoever does not adapt or did not adapt will simply disappear.

For three months the sales floors were closed, forcing distributors to establish channels of communication and contact for their customers.

In this sense, Pablo Moreno Sandoval, brand director of the agencies belonging to the Volkswagen Group and the BMW Group of the Autofin Group, shared that in his case, having focused on digital media gave them a certain advantage when the confinement took them by surprise. : “In the first place, the showrooms were closed, only the after-sales, service and spare parts areas were open because they were an essential activity. We had to reinvent ourselves and fortunately in the agencies I am in charge of we already had a path traveled 3 years ago where we ventured into digital sales, which are not really digital sales but rather a promotion through media such as Facebook, Instagram, your own page, Google AdWords, where you advertise to generate interest, the client contacts you and a seller follows up. This was our salvation because that way we were able to continue serving our customers, and although sales did drop, they did not go to zero and that is how we managed to survive. The three months that we were closed (April, May and June), were very difficult. In the first month, the 18 agencies in my charge, we lost a fortune”.

wait for your new car

For the director of Fersan Motors and Navarra Motors, the main problem is the lack of inventory, which annoys customers; In his opinion, the average waiting time is 5 to 6 weeks and the only thing his team can do is be clear with the buyers. “All the problems due to the lack of supply (model, version or color) must be explained to them, and sometimes we even give them an expectation according to what the plants themselves handle for us, when the unit could arrive.

That is why we ask you not to limit us in color because the wait for a certain color can take between 3 and 6 more months. Today practically, the automotive sector or the agencies that I represent, are selling by catalog. To the extent that they notify me that the unit is coming on the ship, that it will arrive at the port or that it will arrive at the agency, I can notify and give the client an estimate of the time in which the unit will be available or on the contrary, that it will take up to 3 months.”

From the customer side, the wait is definitely less of a hassle when the dealer keeps you informed.

This is the case of Brisa Sandoval who at the end of 2021 acquired a Suzuki Swift BoosterJet, the delay was just over a month. “The purchase was in cash but since I visited the agency they told me that the version and color that I wanted was not available. They told me that it could take 20 days but that it could increase to a month. Even the seller told me that a van that was on the sales floor would no longer have units until January or February 2022.

After depositing the section, the seller gave him details about the delivery: “He was calling me and in the end my car arrived a few days earlier than expected, which gave me time to process the license plates and take out insurance so I could pick it up while the agency billed me for my car”.

Russia, Kirov - My 15, 2017: Showroom and car of dealership Nissan in Kirov city in 2017

Russia, Kirov – My 15, 2017: Showroom and car of dealership Nissan in Kirov city in 2017

Fewer cars more profit

Excess inventory is a thing of the past and with it a new business model is more profitable for automakers and distributors. “We and the brands learned that the business model that existed of being full of cars and giving discounts to be able to remove those excess inventories was not the most profitable model for them or for us because money had to be put in,” Moreno Sandoval said. .

He added that “expenses fell, we improved the margin but above all we achieved zero financial cost; by not having cars you do not pay Financial cost that was one of the expenses that had the most impact on the income statement. We were used to going into agencies and having all the models in all colors in all versions and today we don’t even have cars, most of the ones you see in agencies are already sold and what is done is that it is pre-sold . Today with fewer cars we earn much more money, which is a great lesson. Mexico was one of the countries with the worst profitability for brands in the world. A car in Mexico was sold much cheaper than in other countries.

Origin is irrelevant

Thinking that a certain model may or may not be available because of its origin is totally wrong.

“Possibly some Asian brands are not having this blow as severe as the rest, but for me it is a generalized issue worldwide. There is no mixture that can be clear. It may be that the suvs arrive on a ship and with that I will have enough product to deliver according to demand. There is no indicator that shows a clear trend towards any model”, declared Reginaldo Soto.

sky high prices

Price escalation is a phenomenon that has worsened in these two years of pandemic.

“I think that raw materials, such as steel, have risen a lot. It also has to do with supply and demand, something that is normal when there are few cars and many customers. We must be careful with our customers and have loyalty and commitment to them, we must not take advantage of the situation, we must understand that this is the market today. Regarding the exchange rate, I believe that we have had a reasonably stable peso, but as soon as the exchange rate moves, there may be an increase in prices, and I also believe that coming from a market that was too competitive, today it is having an adjustment taking advantage of the situation”, concluded Pablo Moreno.

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