Some good news as we put the past year in our rearview mirror: The U.S. auto industry will be entering 2021 with the momentum generated in the last quarter after the coronavirus pandemic put the brakes on business earlier in the year.
“The model-year rollover was significantly disrupted over the spring and summer as factories and offices closed,” said Charlie Chesbrough, Cox Automotive senior economist. “However, the production and distribution of model year 2021 vehicles has since recovered and is now nearly at the same levels as last year.”
Of all inventory available in early December, 53 percent was model year 2021, which was just shy of the 54 percent of offerings available a year ago, Cox Automotive data showed.
But, when new-car production, inventory, and sales were affected by the pandemic, many dealers began placing additional emphasis on the used-car side of the business to close the gap.
Take Nimnicht Buick GMC on Philips Highway for example.
“Like other dealers, new-car inventory was down, so far down because of COVID,’’ said Jackie Lynch, general manager at Nimnicht Buick GMC on South Philips Highway for the past 13 years. “We had to find some way to fill that gap, so we began looking for opportunities on the used-car side. We already do a great job with GM Certified. But one thing we really hadn’t dipped our toe into was the luxury side of the market.’’
That changed last February when Lynch hired Tony Rossano as his general sales manager. He came with a wealth of knowledge of selling high-line pre-owned vehicles.
Soon afterward, the dealership introduced the Nimnicht Luxury Collection — premium pre-owned vehicles like Porsche, Bentley, BMW, Mercedes-Benz, and even Ferrari.
“He knows how to do it; he knows what cars to look for, what certain packages customers are looking for,’’ Lynch said of Rossano. “He has the experience, so we took the reins off and let him loose.’’
Lynch, who has been in the business for 38 years, is quite pleased with the initial reaction to the luxury collection.
“It’s going very well. We’re still trying to learn what sells best here at the dealership, even after nine months, but we know we can sell Bentleys,’’ Lynch said. “There are certain vehicles that are selling better than others, and we’re just focusing on keeping those vehicles in stock.’’
He normally keeps between 30 and 35 vehicles in the luxury collection, depending on what he’s able to find. He’s also able to get some nice trade-ins as many of his buyers are driving similar high-line vehicles.
“The thing that benefited us the most is that it’s brought a different customer to our dealership,’’ said Lynch, whose used-car sales were up 25 percent in 2020. “What we’ve found is that these people who come in and look at these high-line cars also have our products at their homes.
“A lot of times, a lot of these luxury cars are their third cars instead of a daily driver,’’ Lynch said. “That’s been probably the most exciting thing for me is that they’re bringing a more diverse customer base than we ever had before.’’
Online marketing has broadened Lynch’s customer base for these vehicles, with many buyers living in the Southeast, particularly South Florida, Orlando, and on the First Coast.
Lynch sold a 2017 Bentley Continental GT Convertible to a woman in Palm Beach for $127,000). The most expensive vehicle sold so far has been a 2020 Mercedes G-Class SUV with 400 miles, bought by a customer in Miami for $197,000.
But not all of Lynch’s luxury cars are six figures. He has a sharp-looking 2018 Porsche 718 Cayman for $57,920.
If, however, your preference and budget call for a late-model German vehicle for under $50,000, Tom Bush BMW has a solid selection of factory-certified pre-owned BMWs available at its two locations — Tom Bush BMW Jacksonville on Atlantic Boulevard and Tom Bush BMW Orange Park on Blanding Boulevard.
Andrew Buttrill, CPO sales manager at the Jacksonville pre-owned dealership, felt the effects of the pandemic, especially last spring.
“When they shut down some of the factories, the new-car business decreased due to low inventory and that’s where we can receive quite a bit of our inventory,” Buttrill said. “It took a month or two for us to actually feel the repercussions on our side. But ultimately the used-car inventory that was out there in the marketplace shrunk. When you have low supply and there is still a demand, it makes the prices spike a little bit at the auctions.
“It was making it hard to buy cars because you had to throw out the old ideology of what you should be buying a car for,” Buttrill said. “You basically had to decide if you wanted inventory or not. I walked a fine line, I ran with a lower inventory than I ever had before. I usually carry between 80 and 90 cars, but I was running with about 60 to 70 since late March, so it definitely hurt the business.”
Buttrill, who has spent his entire 30-year automotive career with Tom Bush, including the last 15 as a pre-owned sales manager, had to make some tough choices.
“The way I looked at it, I was picking and choosing my battles,” Buttrill said. “I was filling the holes over here, so much of our inventory is Certified Pre-Owned BMWs that I looked at model lines. There are some models that are more of a niche market, like the M class and the GT class. I spent less time focusing on them and more energy trying to buy our bread-and-butter models like the 3 Series, 5 Series, X3s, and X5s. Those cars you just have to have in inventory.
Why are they so popular?
“I think they fit a large demographic of people where you have the sedan and sport utility buyers, a large number of buyers fall into that category,” Buttrill said. “These are certified BMWs that fall in the range of $25,000 to $45,000. Most of these models will fall into that category with a 5.0 -iter X5 being the upper-end and a base 320i sedan being toward the bottom — that’s the gamut.’’
In the last couple of months, Buttrill has built back his inventory to around 80 cars, coinciding with the new-car business bouncing back.
“The new-car department has a lot of orders that come in toward the end of the year — some people need to spend money at the end of the year and they want to buy a nice car,” Buttrill said. “Our allocation for new cars in January is pretty slim, so I’m going to not only stock up on certified cars but also current year models and demos as well.”
“I’m going to try and acquire a good bit of 2019 and 2020 model year inventory, so if people are looking for a new car and they can’t find what they want, then maybe they’ll take one with around 8,000 to 15,000 miles on it,” he said.
Buttrill is optimistic the market will continue its upward trend in 2021.
“If the factories get back to normal capacity and the economy continues to grow, I’d love to see a 15 to 20 percent increase next year,’’ Buttrill said. “At the end of the day, 2020 was not a horrible year for the automobile industry. There were some bright spots and I think if we can have at least a 15 percent increase over this past year, it will be a decent year.
As for North Florida Lincoln on Southside Boulevard, it experienced a similar scenario.
“This has been an interesting year for sure; just the unknowns have been tough,’’ Vice President and Dealer Principal Tom Lynch said.
Recently promoted General Manager Morris Jelks added, “Different protocols and processes for safety were implemented. We are used to changing things up very quickly, but this year has been especially challenging in that regard.’’
Both new- and used-car inventories tightened up considerably in the spring but loosened up in the summer.
“We saw sales and traffic start to turn,’’ said Jelks, who’s been with the dealership for 34 years. “I think the stimulus money and low-interest rate, plus the clients’ desire to have their own safe transportation really turned things around.’’
Although the dealership’s remote sales jumped from 5 percent to 15 percent, “clients for the most part still wanted to come in and see the inventory,’’ Jelks said.
What models have been selling well?
“We have seen our Lincoln SUV pre-owned certified sales do well across the board,’’ Jelks said. “But the Navigators have really been popular when we have been able to find them and have them on the lot.’’