FM dealers and rental companies feel a pinch of national auto shortage

But in recent weeks, that number has often been closer to 30.

“It’s wild,” said Hensley, who has never seen anything like it in his career. “It’s a whole different ball game.”

The situation is even more dire in some of the company’s other dealerships in six other western states. Many in Reno, Nevada, only had three new cars, while another in Nampa, Idaho, only had six.

It’s a critical look at a nationwide auto shortage that has affected dealerships and rental car companies.

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The COVID-19 pandemic has forced many manufacturers to close factories or slow production, and a shortage of computer chips needed by modern vehicles has further compounded the problem.

Newly built vehicles sit in production facility parking lots awaiting chips, said Bernie Ness, a keen observer of the auto market in his 50th year of owning the Avis car rental franchise in Fargo.

Ness, who is also feeling the effects of the shortage at his business, said supply issues existed before the pandemic. He expects the problem to last until spring 2022.

“It’s a perfect storm,” he said.

The market is also feeling the lingering effects of the worst of the pandemic when consumers jumped on offers from automakers to boost sales after the economy nearly shut down. The incentives helped boost sales, but also eroded supplies.

To add to the woes, the widespread winter blackout in Texas affected many foam plants across the state and disrupted supplies needed for vehicle seats, according to Hensley.

Another development leading to the low stock on lots is an increase in the number of vehicle pre-orders by customers. Before the pandemic, about two or three vehicles per truck would be pre-sold, said Case Muscatell, general manager of Muscatell Subaru in Moorhead. Now that number is closer to seven or eight.

Muscatell said its dealership was reduced to about 30% of its typical inventory of new vehicles.

Hensley is optimistic and said he believes the number of new vehicles will increase month-to-month for the remainder of the year. The buyers are certainly there, he said, as retail sales in many areas of the economy take off.

“We have a lot more buyers, but fewer cars,” Corwin Toyota chief executive said, describing the current climate as a “very hot” market.

Hensley said Corwin “sits pretty well” when it comes to its used car offering, as trade in new vehicles progresses.

One of the factors determining the availability of used cars is that the vehicles retain their value, which means more customers are trading them in. Some have roughly the same trade-in values ​​as the price they were selling a year ago.

Car prices are rising due to shortages, but customers can also get more money for their trade-ins, Muscatell said.

Rental car

Regarding the availability of rental cars, Ness said the situation had not improved much since this spring. Customers can usually find a vehicle if they get a reservation, but if they go to sales desks at airports, they will likely hear a “no”.

The pandemic had a devastating effect on the industry in the spring of 2020, Ness said. Sales in April of that year fell to 5% of normal levels, forcing companies to sell part of their fleets.

Sales have rebounded to around 70% to 80% of normal, Ness said, which, for example, matches passenger boarding figures at Hector International Airport in May.

Airport manager Shawn Dobberstein said boardings were 29,503 in May, down about 21% from May 2019, when 47,796 passengers flew. Dobberstein said they are not using 2020 in the comparison numbers due to the pandemic.

Getting a rental car on a non-airport location is also not a good bet for travelers.

At Enterprise Rent-A-Car on Main Avenue in Fargo, Demarais Purifoy said finding a rental vehicle is a lot like playing the lottery.

“This is the luck of the draw,” he said.

Purifoy also suggested reservations, but said its business was reduced to around 15 rentals per day compared to “come and go all day” cars previously.

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