Automobile dealerships in the United States capitalized handsomely on shortages of new and used cars in recent months, but investors appear to be worried demand will back off even as supplies increase, Reuters reported.
Working against auto sales are rising interest rates that affect the cost of borrowing to finance car and truck purchases, increasing inflation that is eating into household budgets and high gasoline prices.
AutoNation Chief Executive Mike Manley was on the hot seat today (April 21) during a conference call with analysts on first-quarter earnings results, Reuters reported. Shares in the owner of dealerships lost $3.74, or 3.54% on Thursday (April 21).
“We haven’t seen any drop-off in our inquiry levels,” he said in the Reuters report. “They are up year over year. The industry is at a level where there is more demand” than supply of vehicles.
Manley reportedly said, referring to production recovery: “We have customers for everything that’s coming.”
Tina Miller, chief executive of U.S. dealership chain Lithia Motors, told Reuters that “demand has continued to outpace supply.” She said average monthly payments have risen to about $450, compared with pre-pandemic average monthly payments of $300.
Reuters quoted Manley as saying executives at AutoNation responded to pricing and sales trends for some used vehicles during the first quarter and began clearing out inventory.
“We started to use the data we had available to us. We corrected very aggressively in the quarter,” he said.
AutoNation is not the only player in the industry facing challenges. In discussing its first-quarter earnings, online used car dealer Carvana said both internal production delays and external macroeconomic made the quarter a difficult one.
Read more: Carvana Crashes Into ‘Challenging, Difficult, Deteriorating’ Environment
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