Ford Motor Co. used to flood Beau Boeckmann with more cars than he knew what to do with. Now, he’s not getting enough.
Boeckmann, vice president of Galpin Ford in Los Angeles, asked for 100 Fusion sedans in July. He received 7.
“I am begging for inventory across the board,” said Boeckmann, whose dealership is the automaker’s top-selling U.S. store. “I couldn’t sleep a year ago because I thought, ‘We have a year’s supply of these cars!’ And now I’m worried about our inventory again because we don’t have enough.”
With Ford, General Motors Co. and Chrysler Group LLC kicking a decades-long habit of building more cars than customers want, dealers are howling that they can’t get enough models to drive sales back to pre-recession levels. This newfound discipline preserves the automakers’ profit per vehicle and draws praise from investors. At the same time, it cuts retailers’ volumes.
Gordon Stewart, who owns Chevrolet dealerships in Michigan, Georgia and Florida, said GM isn’t producing enough Equinoxes to meet his requests. Sales of the Equinox could be triple or quadruple current levels if he had adequate supplies, he said.
“The requests mean nothing,” Stewart said. “They appreciate the requests, but it does nothing for what they can produce.”
GM said last week it would increase output of the Equinox. The company is trying to meet demand without building too many vehicles and relying on discounts as it did in the past, said spokesman Tom Henderson.
“We’re working awfully hard to provide the additional capacity to meet that demand,” he said. “But we don’t want to go back to the days where we had overcapacity and had to use a lot of incentives.”
Chrysler slashed production by half in 2009, and GM cut 44 percent as the companies went through bankruptcy and extended summer plant shutdowns. Ford, the only major U.S. automaker to avoid bankruptcy, lowered output 16 percent, according to J.D. Power & Associates in Troy, Mich.
Cutting production has allowed the automakers to curb the discounts they’d relied on to move inventory for years, said Tom Stallkamp, a partner at private-equity firm Ripplewood Holdings LLC and a former Chrysler Corp. president.
“It took the financial collapse to make them realize that pushing them down is not the best way, that having consumers pull is better,” Stallkamp said.
Ford had 349,100 vehicles of supply at the end of July, 30 percent less than two years earlier, while GM’s inventory dropped 43 percent to 424,000 and Chrysler’s declined 53 percent to 191,000, according to the companies.
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