Supply chain issues hit Orange County auto dealers hard on one metric—nearly half of the local dealers reported drops in sales volume over the past year.
Total new car sales fell 19% to 50,102 in June, while used car sales were down 6% to 34,230, according to the Business Journal’s latest Auto Dealers list.
The trend follows a national decline in vehicle sales. The U.S. vehicle market saw an 18% drop in registrations from June last year to June this year, while registrations in Orange County fell 15% during the same period, according to the Orange County Auto Dealers Association (OCADA).
Local dealer payrolls also took a slight hit this year—total salespeople at dealerships declined 2% to 646, while the total number of service personnel stayed flat at 1,343.
Falling sales, however, aren’t an indicator of falling consumer demand, according to OCADA Executive Director John Sackrison.
“Demand hasn’t softened,” Sackrison told the Business Journal. “If anything, it’s grown, as a lot of people have put purchases off during the pandemic.”
Despite falling volume, the local auto dealer industry is still up in terms of profits, with many dealers far surpassing their pre-pandemic levels.
Total sales volume for the local auto dealer industry grew 5% to $5 billion this year, thanks to higher margins on car sales and service work.
Supply Chain Uncertainties
Supply chain issues have been plaguing the auto industry for the past two years.
The shortages began with the pandemic and have been exacerbated by various global crises, such as the war in Ukraine and lockdowns in China.
The average car comprises around 30,000 parts, many of which are imported from all over the world.
That’s why “[if] any country has some sort of crisis or issue, that can impact automobile manufacturing across the globe,” Sackrison said.
“You only need a couple of those parts to be in a shortage, and that stops the production line.”
With production lines on hold, auto dealers have been struggling with low inventory levels as demand outpaces supply.
That explains the 13 local dealers who have seen drops in sales volume over the past year.
Newport Lexus in Newport Beach saw the steepest drop in sales, an 18% decrease to $167 million.
A close second is Hardin Honda in Anaheim, which saw sales fall 17% to $71 million.
Weir Canyon Honda in Anaheim and Tuttle-Click Tustin Inc. also saw substantial sales dips, 14% to $64 million and 12% to $52 million, respectively.
It’s not clear when dealers will see an end to these shortages.
“I’m hearing that things should get better by the end of this year, but no one really knows for sure,” Hyundai Motor America CEO Randy Parker told the Business Journal in June.
Sales Standouts
Significant sales boosts by some local dealers made up for the sales dips faced by others.
Fletcher Jones Motorcars in Newport Beach retained the top spot on the list with $785.3 million in sales volume, an estimated increase of 19% year-over-year.
AutoNation Infiniti Tustin reported the largest percentage increase in sales, 68% to $91 million.
Three other local dealers—Elmore Toyota in Westminster, AutoNation Ford Tustin and Santa Margarita Ford in Rancho Santa Margarita—reported sales rose more than 30% in the past year.
