Trouble Finding a New Car? Shortages Begin to Appear

Taz Harvey had only one Sentra for sale at his dealership.

Ford Motor Co. F +1.39% launched U.S. production last week of the auto maker's hot-selling Fusion sedan at a factory in Michigan, a move that highlights a broader problem for auto makers: They are short of the cars U.S. consumers want to buy.

At Dublin Nissan in Dublin, Calif., owner Taz Harvey started August with one Sentra on his lot. The car was redesigned for 2013 and sales have since soared with its improved fuel economy luring shoppers.


"I sell five or six a month and normally have 15 to 20 in stock," Mr. Harvey lamented.

It is a similar story for Mike Rouen in Woodville, Ohio. His Chrysler Dodge Jeep store outside of Toledo has a half dozen Jeep Wranglers and about the same number of Grand Cherokees. "I can sell more than that in a month, and it's tough. We're having a hard time getting enough Jeeps," he said.
On Tuesday auto makers are expected to report U.S. car and light-truck sales rose about 14% in August, to more than 1.4 million vehicles, even as spot shortages dog Subaru, Ford and Honda Motor Co. 7267.TO +0.39%

Jason Henry for The Wall Street Journal

 

A California dealership washed its last Sentra ahead of Labor Day.

For consumers, limited supplies of popular models mean bargain prices are harder to come by, even during the annual summer clearance sales. Automotive information website TrueCar.com estimates car companies spent an average of $2,477 on sales incentives last month, a decline of 2.6% from a year ago and the lowest level since January.

The appearance of spot shortages signals a new phase for the U.S. auto industry's recovery. Over the past three years, as sales rose from the bottom of their 2009 trough, car makers have had little trouble keeping the market supplied, even as more and more shoppers streamed into showrooms.

Now, they are facing a delicate balancing act as supply and demand converge. Expanding plants is expensive and can backfire if sales growth slows. But tight inventories can temper an auto maker's growth by nudging prices higher and causing shoppers to turn to competitors.

"Manufacturers are in a precarious situation," said Karl Brauer, a senior director at Kelley Blue Book, which provides auto sales data for dealers and car buyers.

"The shortages we're seeing now aren't yet severe, but [car makers] have to predict where they are going to be six to 18 months from now."

At Silko Honda in Raynham, Mass., Adam Silverleib began August with only enough Accords and Civics to last about half the month. He has been resupplied to keep sales rolling, and even the last of his 2013 models are being snapped up.


Ford is feeling pinched by shortages of its Fusion after a flashy redesign. The car's sales are up 13.4% so far this year. Ford is struggling to make enough of them, and in July Fusion sales fell 12%. The company warned the issue will linger for another couple months, too.

"We could have sold more if we had more," said Joe Hinrichs, Ford's group vice president of the Americas. Ford sold 181,000 Fusions this year through July, a 13% increase over a year earlier before the new vehicle went on sale.

Ford said it has been selling all the Fusions it has on dealer lots in just two weeks, when the average for most cars is two months.

The combination of strong demand and tight supplies is pushing up Fusion prices. In July, Fusions on average sold for $26,137, 13% more than a year ago, according to TrueCar, an auto shopping website. Likewise, Accord and Sentra prices are up 5.4% and 2.2%, respectively. The average price of all passenger cars was down 0.8%, at $26,715, TrueCar said.

For now, higher prices don't seem to be deterring buyers, analysts said. Because of low interest rates, consumers are able to get affordable monthly payments even on slightly more expensive vehicles. Many of the new models also come with features they desire, so it is easier to justify paying more. On the new Accord, for example, Bluetooth wireless technology for connecting a cellphone is a standard feature on almost all models. Just a few years ago, that would have been a pricey option.

According to dealers, other cars in tight supply include the Toyota Corolla, Chevrolet Impala, Honda Odyssey, and Subaru Forester. Inventories of the Corolla have thinned because Toyota is phasing out an older version of the car before it launches an all-new Corolla later this year, dealers said. Subaru's two main Japanese factories are running at full capacity and demand has outstripped supplies of the redesigned Forester.

The Impala, made by General Motors Co., GM +1.43% is affected by a similar issue. The car was recently redesigned and the new version has drawn a lot more buyers than the old one. At the end of July, Chevrolet dealers had a total of 14,619 on their lots—enough to last just 28 days at the current pace of sales. Generally car makers like to keep a 60-day supply on the ground.

A GM spokesman said Impala inventories are improving because the company was for a time only making models with six-cylinder engines, but now is making versions with four- and six-cylinder engines.

In some areas of the country, even vehicles that aren't big sellers can be tough to find. For Mr. Harvey, the Nissan dealer in California, the battery-powered Leaf is in scarce. The car hasn't been a big hit for Nissan Motor Co., 7201.TO +0.59% but Mr. Harvey nevertheless sells about 15 a month. "The other day I checked the inventory and I had three," he said.

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*article source wall street journal