Car dealerships grapple with rocky supply chain

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This article was published 18/03/2022 (1457 days ago), so information in it may no longer be current.

Westman automotive dealers have witnessed significant change over the course of the pandemic in the way they are able to do business, as the supply chain for new and pre-owned vehicles continues to be tested.

Kent Forman has overseen his auto dealerships be built from the ground up since 1998. He started with Forman Honda that year, followed by two body shops in 2009 and Forman Mazda in 2011.

The dealer said his businesses faced a three-stage approach since the pandemic was declared in March 2020.

“The first stage was fear, fear of the unknown, and what’s going to happen,” Forman said. “Are people going to stop buying cars?”

He said his business was fortunate to not see a drop off in customers coming in, and very minimal layoffs occurred with only some older staff seeking retirement. Forman said the second stage felt like a resolve period, trying to implement how they could best serve their customers in a safe manner.

The company installed plexiglass barriers, adhered to a strict vaccination policy, suspended test drives and held many virtual meetings with staff and clients.

“Stage 3 was just fatigue,” Forman said. “We’d find guys weren’t wearing their masks as much as they should, that attitude was around with everyone. It had been two years.”

Overall, he said the direct effects of the pandemic did not impact their business as much as the indirect factors they are experiencing today. Namely a supply-chain crunch that Forman figures began in November for both Honda and Mazda.

“We are starving for new inventory, when we went through December and January, having virtually no new cars to sell, what does come in is quickly sold,” Forman said.

“We’re probably 60 per cent of what we’d like to get or less, in terms of our normal volume. Our hope is that we’re able to catch up later in the year as the factories get going again.”

He said almost every job the company services at the body shop has been impacted due to a significant delay in auto parts coming overseas. Before the pandemic, it was a matter of waiting a few days. Forman attributed a scarcity in microchips and labour shortages as two of those key delaying factors.

Over the past year, flooding experienced in B.C. delayed Mazda parts coming from Vancouver to Brandon, and Forman said the looming CP Rail strike could further frustrate residents looking to buy pre-owned or newer vehicle models. He said the demand for vehicles has remained consistent.

“The days of having cars on the lots, those days are not coming back for quite some time, I expect,” Forman said.

Despite frustration in the arrival time for vehicle parts, Forman is pleased that demand for vehicles is there. He said the biggest switch over this timeframe has been watching his sales team sell what they had in the lots, to now what is coming in.

Across the city, business has been overwhelmingly busy for Jeff and Tanya Brown, who operate European Auto Imports in Brandon. According to the husband and wife, the family-run business since 1982 has earned a new clientele based on an influx of European import cars coming into the city.

Jeff said he has found many of the dealers in the city have not been able to keep up with traditional domestic inventory of vehicles, and as a result have brought in many imports through vehicle auctions.

“A lot of those shops aren’t prepared to work on those cars,” Jeff said.

“Once they sell the cars, we seem to be growing our clientele. It’s kept us really busy.”

Over the past two years, the husband and wife said there has been a significant change in their clientele, shifting away from their large farm and commuter clients.

He figures 50 per cent of their customers were from Saskatchewan pre-pandemic, and many people would come in from Winnipeg and Regina looking for vehicles with diesel engines, based on word of mouth.

“That ended when the pandemic started,” Jeff said.

“We haven’t seen a lot of those customers in two years.”

European vehicle brands such as BMW, Mercedes, Volkswagen and Audi models have become hot commodities for their Westman customers coming in, looking to purchase pre-owned vehicles. The couple said they were able to sell to many people who chose to use their money saved up for international travel on a higher-end set of wheels.

“They might have a project car that they put off, now they have the funds and time to get it worked on,” Tanya said.

Tanya explained the larger European import dealerships in Winnipeg are just starting to see a decrease in the number of cars available on the lot, compared to the crunch that companies like Ford and General Motors felt when the pandemic first began.

Jeff said it has been interesting surveying prices on the pre-owned vehicle market skyrocket over the past year. He said he believes there are more people taking part in auction-based sales, taking a $20,000 car, and driving that price up to $25,000 based on a bidding war, for example.

In terms of the availability for many of their parts, much like Forman, she said they have experienced a drastic decrease in supply as a result of shipping containers stranded in a backlog overseas.

However, she has found companies like Volkswagen have done a considerably good job in issuing parts to them based on charter planes delivering cargo from Germany.

In addition, the dealership said the recent so-called freedom convoy movement that forced a shutdown of the Ambassador Bridge between Ontario and Michigan caused a significant challenge in getting parts to their Brandon shop.

“One week of the closure of the bridge in Ontario backed up our parts for six weeks,” Jeff said.

Tanya said her husband, who has worked at the location for 30 years, has not taken his foot off the gas, often working at the store seven days a week. The couple said they have worn a lot of hats on the job recently, managing staffing issues and keeping Jeff’s father’s business in good hands.

The two said they are very fortunate for their longtime clientele base.

“We’ve had a lot of customers that have bought 20 cars from us, being that we’ve been a family business here for about 40 years,” Jeff said.

» jbernacki@brandonsun.com

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