A few short years ago, Ryan Dolan, dealer principal and chief executive officer of Dolan Auto Group, would pull up to the Toyota dealership founded by his father, Tom, and survey nearly 1,000 shiny new vehicles on the lot as he headed into work. Today, the Dolans’ flagship dealership on Kietzke Lane – along with virtually all major brand car and truck dealerships across the nation – boasts but a handful of new vehicles, if any. Nowhere has the global shortage of semiconductor chips and other material shortages been more keenly felt than in the automobile industry. Chip shortages have led to lengthy production and delivery delays that have completely transformed the way auto dealerships sell cars. In the past, dealerships used a form of short-term financing known as flooring to purchase vehicles from manufacturers, which was repaid as the vehicles were sold. Now, new cars are sold long before their wheels ever touch Northern Nevada asphalt. “It’s not like the old days when Henry Ford built all his cars in Detroit, and all his suppliers were right there,” Ryan Dolan told NNBW last week. “We have become dependent on other countries, and when the pandemic hit it set things into motion that we can’t really get ourselves out of. “It is a worldwide supply chain and manufacturing issue that’s affecting all industries,” Dolan added. “It’s a global economy, and you don’t realize that (automobile) manufacturers have all these subsidiaries they use to build their vehicles.” Widespread global supply issues started with the COVID-19 pandemic. Although that event was the catalyst for the delay in producing semiconductors, it was quickly followed by a perfect storm of additional adverse factors, including complete shutdowns of major manufacturing cities in China, truck stoppages along the Canadian-U.S. border, and the ongoing war in Ukraine. Semiconductors are used in dozens of vehicular systems, from stereos to steering. There’s also a scarcity in magnetic metals, neon gas and other materials that have hamstrung vehicle manufacturers’ ability to build and deliver cars, trucks and even big rig 18-wheel trailers. “All these things I didn’t really pay attention to during the previous 20 years – I didn’t really have a need to,” Dolan said. “I’m learning a lot more about vehicles and what makes them run than in years past.” Shift In Business Dick Campagni has been selling cars in Carson City since 1985, and he’s closing in on 50 years of working in the auto industry. Campagni Auto Group owns the Capital Ford and Carson City Toyota dealerships.
Dick Campagni
“I never thought I would see the day when I could walk out the door of my dealerships and there would be no new cars on the lots,” Campagni said. “But it’s also an interesting time because it’s brought about a whole new way of selling and reaching out to customers since every new vehicle we get is already sold – about 95 percent of the cars we receive from Toyota and Ford are presold.” Any new cars that are on site are usually awaiting pickup by customers. That fact has led to a radical shift in the selling model at auto dealerships. Gone are the days of sales staff jumping in the back seat of vehicles for demo rides with customers; instead, they now spend their time helping customers choose different options, trim levels, colors and upgrades while building made-to-order vehicles online. And even though customers who walk through the doors at Campagni dealerships don’t have a lot of new inventory to view first-hand, they usually are already well-versed with the pros and cons of different models of Fords and Toyotas, Campagni said. “The whole industry has changed. I don’t know if it’s a good or bad thing, or that it is here forever. At first, we didn't know what was going on because it was so new and so different. But the good dealers have adapted. “Our reputation hasn’t changed, and it’s still all about how you treat your customers,” he added. “We still have to give them a reason to come see Campagni Auto Group instead of going somewhere else; that hasn’t changed.” Dolan Auto Group, meanwhile, operates Toyota, Mazda, Dodge Kia, Jeep, Chrysler and Lexus dealerships in Reno and Fernley. The production problems and lack of new inventory are equal among all vehicle manufacturers, Ryan Dolan said. “If you ever told me I would be begging manufacturers to send me cars on a day-to-day basis, and that I would have a list the size of Reno waiting for cars, I would have said you’ve lost your mind,” he said. “I don’t think we get out of this for the next two or three years, which ultimately has changed the way we sell cars,” Dolan added. Customers who want new cars now work with sales staff to order them online. The shift brings some trepidation for auto dealerships since it’s not a far stretch from Tesla’s direct-to-consumer retail model. However, dealerships bring important last-mile delivery services that cement the relationship between consumers and auto dealerships, Dolan said. “It’s scary to us dealers because (manufacturers) can go to a direct-to-consumer model since customers are ordering (vehicles) anyway, but they don’t have the infrastructure to deliver and service vehicles. They can’t make sure the consumer understands all the gadgets and features, as well as provide servicing for the vehicle.” Lead times for delivery also are more or less a crapshoot, he added. New orders used to be delivered in six to eight weeks; now, it can be anywhere from two months to a year depending on what vehicle you order and how tricked out it is – top-level trim packages require more electronics which require more semiconductors, which takes longer to deliver. “Now it’s a flip of the coin – we don’t know, and consumers don’t want to hear that,” Dolan said. “It is bizarre, and it’s a whole different way of doing business. Now, you sit at a computer and decide which vehicle you want to order and which one you have the patience to wait for.”
Dick Campagni