Fewer Cars, Bigger Profits: Auto Makers Look to Stay Lean Post-Pandemic

In yet another pandemic-related shift to normal life, the way people buy cars is changing in America, according to The Wall Street Journal.

Due to factory closures from the spring, dealers don’t have the same stock as they once did.

And because of that, many buyers are having to order cars online and wait a few weeks for them to be delivered — a move running contrary to some consumers’ desire for instant gratification.

The change, WSJ speculated Sunday (Nov. 22), could continue even beyond the pandemic, potentially ending an old American standard of dealers with rows upon rows of cars on display outside that customers could walk in and drive off the lot the same day. In Europe, by contrast, the practice of preordering cars weeks in advance is more common.

Now, dealers are finding that the demand keeps profits higher. Automakers have seen a surge in demand that became difficult to meet due to the shutdowns earlier in the year, resulting in a seller’s market, the paper said, with car companies able to keep prices high. The inventory crunch has also resulted in the companies focusing mostly on their most popular models and feature combinations, which has resulted in less complex and leaner supply chains.

Another factor has been the shift to online shopping, which has resulted in dealers not needing as many cars on display when people are reticent about coming out in person because of the virus.

The fear of catching the virus has driven people away from mass transit, with more of a focus on buying cars. PYMNTS reports that 66 percent of respondents to a survey had switched to using their own cars rather than the bus or train to go to work. The survey found that 43 percent of the respondents didn’t trust their fellow passengers to follow social distancing precautions recommended to stave off the virus.