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Signs of Normalcy

Roger Elswick, Community Honda, Kia and Toyota

June 2021

Despite a severe inventory shortage affecting automakers and dealers nationwide, I believe we are beginning to see signs of normalcy. You could see it at the recent Houston Summer Auto Show. Automotive News reported that “normalcy was one of the biggest attractions” at the show and was one of the first new-vehicle expos since the coronavirus pandemic began. With the many displays and entertainment events set up inside the NRG Center, “it almost felt like old times,” the article added.

High praise goes to the HADA staff that did a wonderful job meeting challenges and overcoming obstacles to pull the show together. The effort began when the popular, multi-week Houston Livestock Show and Rodeo canceled and the May dates became available. HADA quickly went to work seeking manufacturer participation and was able to sign up about half of the regular participants. Other automakers had to skip the event because they lacked inventory to display due to the microchip shortage. However, to their great credit, Houston dealers stepped up to represent their brands with independent displays.

In addition, HADA expanded the five-day show to include boats, RVs, and fishing and hunting accessories. We also added “summer” to the name to reflect the move from the show’s usual January timing.

The show still had to meet new rules and protocols put in place to continue to cope with the pandemic. For example, “riders got the Jeep experience only from the back seat as masked drivers whisked them around the bumpy setup,” Automotive News noted. Cleaning crews were also kept busy disinfecting vehicles and displays.

Thankfully, with ongoing vaccine rollout and updated guidance from the CDC in May that reduced restrictions, it was not necessary to check attendees’ temperatures and require facemasks, although many attendees chose to wear masks. The result was a full-featured, successful summer auto show well received by the industry and public alike, and a worthy preview of our 2022 show next January.

The show, which is HADA’s number one moneymaker, also helped generate enough income for the association to continue to fund the scholarship program and other initiatives.

The improved conditions are also apparent in our dealerships. I think our environment overall is definitely getting closer and closer to normal as more people are vaccinated and seem less concerned about threats. Customer visits to dealerships are definitely up. The mood in Houston is also positive and we are in recovery for sure, which also boosts consumer confidence to spend on purchases put off during the pandemic.

Of course, what is not normal right now is the significant lack of inventory as shortages of semiconductors have crippled production worldwide.  We are living in an environment where demand is far outpacing production.

As I write this column, a new report by analysts at J.P. Morgan estimate dealers across the United States are sitting on a mere 23-day supply of new unsold vehicles as opposed to a normal 60-day to 70-day supply, according to Bloomberg.  Customers are literally snapping up new vehicles as soon as the car haulers drop them on dealer lots. I would also add that extremely positive used car valuations right now are very good when the customer is trading in their vehicle.

Although year-over-year sales have rebounded strongly through the first quarter 2021, the inventory drop is expected to hamper sales of new vehicles at least through the summer, creating uncertainties about the future.

Finally, I would like to salute HADA and TADA staff and dealers who took part in the recently convened legislative session in Austin.  With all the Covid restrictions it was a much different session, but again, we successfully protected franchise laws from direct sales by manufacturers, mainly Tesla.

Dealers also got legislation passed providing flexibility and efficiency in titling and registering motor vehicles by allowing a dealer the option to title and register in any county willing to accept the application, regardless of a closure of a tax assessor collector office.

As my term as HADA Chairman hits the half-year mark, I must repeat how proud I am to represent Houston’s new-vehicle dealers. My advice to dealers remains the same: keep your foot on the gas. We have a strong market with challenges but also opportunities. Therefore, it’s full speed ahead for our HADA team.