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Monday, Dec 5, 2022
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Inventory Constraints Put the Squeeze on Automakers

Cox Automotive Inc. economists employed a bit of humor in their recent third-quarter forecast presentation, dubbing Depeche Mode’s “Just Can’t Get Enough” as the best track to describe the current vehicle supply situation.  

Funny. Although, automakers likely can’t chuckle much as inventory—and the lack of it—continue to hamper sales in OC and across the country.

The largest automakers headquartered here saw their sales slump in September, against the year-ago period.

Fountain Valley-based Hyundai Motor America Inc., OC’s largest automaker by annual vehicle sales and headquartered here, reported a 2% decline to 53,800 vehicles sold last month.

Randy Parker, senior vice president of national sales at Hyundai, applauded dealerships’ work in navigating through the current challenges.

“Hyundai dealerships continue to do an outstanding job of working with customers during this challenging inventory environment, resulting in market share gains for the brand,” Parker said in a statement.

Sister company Irvine-based Kia America also remained upbeat, despite the 4.7% decline in September sales from a year ago to 52,906 vehicles.

“Kia sales continued to break records and build upon the momentum seen since the start of the year, despite the ongoing supply chain issues facing the industry,” Vice President of Sales Operations Eric Watson said.

Normality on Hold

Automakers will need to practice stoicism with economists not forecasting a return to any semblance of normality until 2023.

That’s the word from economists at Atlanta industry researcher Cox Automotive, who are revising their 2021 seasonally adjusted annual rate, an industry figure used to take into account the impact of seasonality on sales, forecast from 16.5 million to 15.5 million. The forecast for 2022 is 16.3 million.

While inventories will continue to improve, there will be “no return to ‘normal’ until 2023—if ever,” Cox posited in the company’s recent presentation.  

Local Activity

The group of automakers with local offices are still up in sales on a year-over-year basis when looking at the 12-month period ended June 30, according to this year’s Business Journal list.

Although, the figures are not necessarily a fair indication of performance given the year-ago period counts an unprecedented, pandemic year.

That said, OC’s cluster of automotive manufacturers, which total eight, reported U.S. vehicle sales of 3.8 million for the June period, up 18.5% from the prior year.

Toyota Motor North America Inc., with an office in Irvine and headquarters in Japan, sold the largest number of vehicles, 1.9 million, in the period.

Fountain Valley luxury automotive company Genesis Motor America LLC saw the largest percentage gain, with sales up nearly 50% to 28,142. The increase accounts for newer additions to its lineup, such as the GV80 SUV and GV70 compact SUV, both of which led vehicle sales in September.  

Despite the shortage of chips and other parts, segments such as midsize and compact sport utility vehicles have helped lift manufacturers’ sales.

Electrics also continue to gain ground nationally.

Cox reported Tesla’s Model X crossover saw sales up 168.2% in the third quarter, compared to a year ago.

Hyundai’s Kona compact SUV also saw a jump in sales, up 83.9% in the same period.

Even in a rugged inventory environment, local manufacturers’ OC headcounts have ballooned since the last time the Business Journal surveyed the companies here, with a 46.5% spike from a year ago to 3,468 OC workers in September.

The run up is led by Irvine electric vehicle startup Rivian Automotive LLC, with a workforce that surged 333.3% to 1,300 as of September as the company readied for the release of its R1T truck, which began deliveries last month, and the upcoming R1S SUV.

The automaker filed paperwork to go public in August, with the documents becoming public at the start of the month. See page 1 for more on Rivian’s IPO.

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