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Days of high dealership inventories may fade away.

Are Democrats in Better Car-Buying Mood Than Republicans?

Dems are “optimistic” while GOP voters are “down in the dumps” because of the presidential election, says Cox senior economist Charlie Chesbrough.

U.S. car dealers may see an increase in Democratic shoppers and, conversely, a decrease in Republican purchase intenders because of the results of the Nov. 3 presidential election, says Charlie Chesbrough, Cox Automotive’s senior economist.

“Democrats may be more likely to buy a vehicle” because they’re elated that Democrat Joe Biden is President-elect, he says, even though incumbent Donald Trump has yet to concede.

Some Trump supporters might back off buying a vehicle for the time being “because they are down in the dumps,” Chesbrough (below) says. “In the next few weeks, people going to dealerships may be different than from the last four years.”

Democrats are now more optimistic, he says. Optimism, consumer confidence and other mindsets help stimulate auto sales.

Although Chesbrough isn’t suggesting that every forthcoming vehicle sale will be to a Democrat, a potential increase in Democratic auto buying carries a certain irony: Auto dealers skew Republican.

Chesbrough’s comments came during an online presentation put on by the American International Automotive Dealers Assn.

Regardless of their political affiliations, automotive consumers will continue to face a more limited inventory selection than previously, he says. Dealer stocks remain sparse in many popular vehicle segments.

That’s due to relatively high demand and lower-than-usual supply as the auto industry continues to play production catch-up from when plants closed for two months earlier this year because of the COVID-19 crisis.

Dealers are “cautiously optimistic” about future auto sales, although those “aren’t expected to go gangbusters,” Chesbrough says. Cox predicts U.S. vehicle deliveries of 14.3 million units this year, down 16% from 2019.

In this year’s second quarter, 26% of surveyed dealers cited limited inventory as a key factor holding back their business, he says. That increased to 60% in the third quarter.

Charlie Chesbrough_2 (002).jpg“The inventory problem is getting better, but it is not over,” he says. “It is stabilizing, but down 25% from last year.”

The average days’ supply is about 60. It’s more (90 days) for slow-selling subcompact cars but less (45 days) for popular midsize pickups, according to Cox data.

While no one wants to see depleted dealer lots, Chesbrough notes many U.S. auto industry people have long called for thinner inventories in contrast to past years when many dealerships stocked acres and acres of vehicles – and often touted that abundance in advertising.

Detractors of that stock-to-sell system “want to get away from a plethora of vehicles with all sorts of colors and trim levels” sitting on dealer lots, he says, noting many people in the business advocate “lean and mean” inventories as a way to lower distribution and floor-planning costs.

American auto buyers differ from their counterparts elsewhere in the world, Chesbrough notes. “It’s very American to go to a dealership and drive away that same day in a newly purchased vehicle from off the lot.”

In other places, such as Europe, car buyers go to the dealership, order a vehicle, return home and then wait – often weeks – for the automaker to build and finally deliver the product.

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