As the microchip supply chain remains a challenge for the automotive world, the manufacturers are continuing to adjust and readjust by either cancelling orders or building units without certain options and components. The heavy demand and limited supply is also forcing OEMs to cut off ordering early or extend production, which will most likely continue through MY2023 and possibly into MY2024.
Many of the OEM’s have taken an “allocation only” approach to MY2023 ordering by restricting orders of some or all models to certain clients and volumes—particularly to their legacy customers.
The Russia/Ukraine conflict is impacting automotive raw materials such as aluminum, palladium, copper and nickel (used in stainless steel) in addition to neon which is used to etch integrated circuits onto computer chips. This has resulted in higher metals and component parts pricing and shipping delays for both OEMs and upfitters.
Our expectation for the near future is that new or adjusted order cutoff dates may be announced with little or no notice, and order cutoffs will be earlier than in “normal” order cycles. We will see longer lead times and extended production time frames along with higher prices and lower incentives. Truck, van and EV production, especially, will be limited along with shorter ordering windows. In addition, most of the OEM’s are no longer honoring Client Incentive agreements on Out of Stock purchases.
The following are the current OEM updates on ordering of key 2023 models:
- Upfit vehicles – lead times have increased.
- Out-of-stocks – continue to bedifficult to source as dealer inventory is at an all-time low and dealers continue to be unwilling to sell limited inventory to fleet customers. Prices are higher than normal—often above MSRP.
- Remarketing – with fleets needing to hold onto vehicles longer, resale values are strong.
- Rentals – are difficult to find due to limited fleet sizes resulting from restructuring during COVID. They require many more calls and hold times to obtain.
Our plan is to be proactive and get you the information that you need. We continue to work on your behalf through engagement with OEMs regarding allocation and production, weekly delayed order reviews, weekly executive leadership meetings, increased staffing to acquire out of stocks, and by rapidly updating our systems with order status. If there is one key piece of advice that we can offer, it is to order early—get your orders into the pipeline. Reach out to your OEM rep and don’t take your allocations for granted.