2022 is off to an interesting start to say the least. The combination of the Omicron variant wreaking havoc on dealership staff, mixed messages about how best to combat the spread of the virus, uncertainty about supply chain and changes in the Fed policy have added to the already nebulous outlook for 2022.
What hasn’t changed is consumer demand continuing to outweigh the abilities of the global supply chain, which is putting dealers in an odd, but enviable position. Many dealers thrive on volume, and although margins are strong, they long for the days of lots filled with ready to deliver inventory. It appears the industry consensus is showing a backlog of demand in the range of 2 to 2.5 million new vehicles. If those predictions prove out, then we can get comfortable with the current market conditions and continue to maximize the opportunities in front of us.
One potential downside to this market is the dealership fixed operations. Increases in parts and labor cost, further depletion of the technician labor force and lower sales volume create the potential for several missed opportunities causing a negative effect on a dealer’s fixed operations.

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