In supply crunch, dealers look to other dealers

Keaton, vice president of sales at Dealer Trade Network, which facilitates transactions between dealers, said his company has added almost 1,000 clients in the last year alone, after previously having done business with about 4,000 dealers in its 17-year history.

In the past, Keaton was accustomed to helping clients who had too much inventory on their hands.

“Really, the name of the game right now for the dealership is maintaining their profit margin with less units to do it with,” he said. “I mean, that’s how they’re all surviving. And it’s a struggle — we hear it.”

So who in their right mind is actually selling vehicles to other dealers when there are so few to sell to customers?

Keaton said it’s dealers who have inventory that is not right for their market. He said Dealer Trade Network has proprietary technology with predictive capabilities that can essentially tell dealers what kind of vehicles are — or aren’t — a good fit for their markets.

Keaton described one situation in which a dealer client in Michigan had trucks that were “built wrong for his store,” so the dealer sold them to a dealer in Georgia. He declined to name the dealers.

“And then the guy in Georgia eats it up. Whatever price it is, it just doesn’t matter because he’s got a retail customer for it, and he’s got to keep customers happy,” Keaton said.

Michael Chapman, vice president of Chapman Auto Group in metro Philadelphia, said his group has been approached by locator companies — businesses such as Dealer Trade Network — but not by individual dealers.

“They’re offering to buy our cars for over MSRP and obviously turn around and sell it to a dealer,” Chapman said. He called the pricing situation “crazy.”

But even crazy offers aren’t enough for him. A couple of the group’s stores have only 12 or 13 new vehicles on the ground to sell, Chapman said.

“We don’t have any to give up,” he said.

Like other dealers, Chapman is hopeful that factory output will pick up in the second half of the year and increase the supply of new vehicles.

“But, again, with so much demand, I don’t know when we’ll have a bevy of inventory on our lots,” he said. “As quick as they come in, they’ll probably go out.”

Hannah Lutz contributed to this report.

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