Carmakers Rush to Replenish Depleted Dealer Inventory

We Told You So! Published April 29, 2009; New Car Shortage Coming - You Better Buy Now!

TRAVERSE CITY, Mich. August 6, 2009; Tom Krisher writing for the AP reported that under normal circumstances, it would take Ford Motor Co. about a month to replace a Focus sold at one of Richard Bazzy's two Pittsburgh-area dealerships.

Today, with customers across the country clamoring to trade in old gas guzzlers under the "cash for clunkers" program, Bazzy says Ford can't tell him when it will send him the bulk of the 50 compact cars he needs to replenish what he sold in the two weeks since the program began.

"I do not have a definite, acceptable answer to that," said Bazzy, who maintains he could sell 200 more Focuses if he could get them. "It's killing me."

Bazzy, like many dealers for just about every automaker, is worried that he won't be able to get cars to take advantage of the second installment of clunker cash that the Senate approved Thursday night.

He's got only two Focuses left and says Ford has told him it will ship only six more within the month. He's complained to his regional manager to no avail and said the clunkers program has cleaned out the Pittsburgh region's inventory.

Annette Sykora, who runs two Ford dealerships near Lubbock, Texas, is running into the same problem. She was conservative, keeping her inventory lean because of the depressed market. Like many dealers, she didn't expect the high showroom traffic and demand from the clunkers program.

She's happy for the increased business, even though she's sold all six Focuses she had. She's also out of midsize Fusions, and after today, will have no more Ford Escapes or Mercury Mariner midsize sport utility vehicles.

If the renewed program expires on Labor Day weekend, she won't be able to take part unless she sells vehicles before they arrive or somehow gets them from nearby dealers.

"I won't be able to restock by then," she said. "It'll be a while before I am replenished."

Ford is trying to ramp up production of the Focus, which ranks No. 2 on the purchase list of those trading in clunkers. The Toyota Corolla is first.

The clunker program offers up to a $4,500 rebate to those who trade in older, less-efficient vehicles for new ones that get better gas mileage.

Ford had only a 25-day supply of Focuses at the end of July, according to Ward's AutoInfoBank. Overall, its 48-day vehicle supply was at the industry average for automakers. Nationwide, Ford had only 21,000 Focuses in stock, down from 38,000 at the start of July.

George Pipas, the company's top sales analyst, said Ford is working as hard as it can to crank up factories to meet demand, but said no automaker can turn on a dime and make more cars instantly. With thousands of parts made by hundreds of supply companies, it takes a month or longer to gear up factories, he said.

"Car production is not something that you can snap your fingers and all of the sudden all the components and materials show up on your loading dock from your suppliers," Pipas said.

August's production schedule was set last month and can't be changed in 30 days, but Ford is working to raise output in September, Pipas said.

It will be six weeks or longer, though, before Bazzy will get his Focuses, and even then he won't get the 50 he wants because all dealers are trying to get more and the lone Michigan factory that makes them can't satisfy the demand, Pipas said.

Toyota says it still has a decent supply of Corollas, at 37 days. But there are shortages of the Prius gas-electric hybrid, with a 13-day supply. Toyota and other automakers have raised production or are considering further increases. General Motors Co.'s product development chief said Thursday the company is working on ways to increase factory output of its more efficient models.

For Bazzy, though, the opportunity to sell more cars under the clunkers program might pass without more vehicles arriving from Ford. He says the company's new system to keep inventory lean isn't working.

"You've got to get these cars built," he said.