Whether true, the majority of Canadian new-vehicle dealers think their automakers aren’t giving them their fair share of global vehicle allocation.
Of the 535 retailers recently polled by the Canadian Automobile Dealers Association (CADA), 57 per cent think this is the case.
The concern might be based on perception rather than fact, and communication breakdowns could be to blame.
It’s something I have often heard in conversations with dealers across the country, even before the ongoing global microchip shortage began decimating vehicle supply at many stores. While dealers understand that microchip shortages are driving current inventory woes, many worry they are being left in the dust in favour of retailers in the United States, a market 10 times the size of Canada’s.
No hard evidence has thus far emerged that would signal automakers are giving U.S. dealers preferential treatment, said CADA CEO Tim Reuss. Indeed, my colleagues at Automotive News in the United States have written extensively in recent months about the challenges dealers there face and concerns about increasingly sparse lots heading into the summer.
But it’s clear that most Canadian dealers think they’re getting the inventory shaft.
As Reuss told me recently, that means automakers have a big “communication job” ahead of them.
“I think OEMs would do well to address this with their dealer bodies, to have them say, ‘This is how the situation is,’ and then to allay their fears or try to dispel those fears with, maybe, some data.”
He makes a good point. If automakers are indeed providing Canadian retailers an equitable share of supply, it’s clear that they generally aren’t doing an effective job of communicating that point to their dealer networks.
There are exceptions. General Motors Canada President Scott Bell has held virtual meetings with dealers, with the goal of being transparent about the inventory challenge.
“We’re trying to give them the confidence that we have teams working to make it as good as we can in the near term,” Bell said. “And there is some light at the end of the tunnel.”
Heading into the next few months, Bell and industry analysts expect shortages will get worse before they get better. While there are benefits to having less inventory — including lower floorplan costs and reduced advertising spending — many dealers will be wishing they had more vehicles to sell.
Automakers should be as upfront as possible with their dealers, giving them the latest updates on the microchip supply chain issues, the impact on manufacturing and what that means for allocation in Canada, North America and globally.
These communications should be frequent, and automakers should be forthright with their dealers if the news isn’t pretty, which is likely to be the case for many this summer.
Dealers know that this isn’t an easy situation for their automakers. The CADA poll found that 91 per cent were concerned about inventory levels and 87 per cent said it would take at least six months from April before they saw an increase in supply. Most will be open to hearing what their automakers have to say on this issue and giving them the benefit of the doubt, since this problem affects every stakeholder.
Unless automakers sharpen their communications skills, the sense of frustration and lack of trust will continue to grow among their dealers.