Car sales: latent threat

To understand this situation, I spoke with 3 people directly related to the market. On the one hand Guillermo Rosales, executive president of the Mexican Association of Automotive Distributors. In the same way with Pablo Moreno, brand director of the agencies belonging to the Volkswagen Group and the BMW Group in the Autofin Group. And finally to Olivia Cortés, a person who for months has been looking for a new vehicle to meet the mobility needs of her family.

two years

For Guillermo Rosales, the most critical moment that the sale of new cars experienced was left behind when he recalled that in 2020, due to the Covid-19 pandemic, sales decreased by just over 26%. He pointed out that this was only the beginning.

“From then on, what we thought would be a slow but continuous recovery was interrupted by the arrival of a shock in the production of vehicles as a consequence of the distortion of supply chains and logistics networks, which greatly affected The second half of 2021 and the first half of 2022 are important. Fortunately, this second half we see how global production is recovering, which is having a positive impact on the Mexican market. We are currently receiving a larger inventory and with this we achieved positive results compared to the same months of previous years. In October, for example, we grew sales by 18.9% compared to October of the previous year. The expectation is that this will continue and that we will be receiving a greater availability of product towards the end of the year and this will allow us to meet the deliveries that are pending.”

apparent recovery

He also said that at the end of last year the delay in delivery was an average of 4 months and that currently it has dropped to 2 months. “We trust that this will be tending to normality by 2023. Around the second half of next year we will surely have resolved this issue of delayed vehicle deliveries” However, for Pablo Moreno, although there are positive signs, they cannot be generalized. “Availability depends on each brand. There are some that have practically overcome it and there are others that others are suffering not only from the issue of semiconductors but also from logistics and other components. There are brands that are almost recovered, at least in the national market, and others that are not. Luck is not the same for everyone and there are brands more affected than others”. From his perspective, this particular scenario will continue into 2023. “I think we will have an almost complete recovery but it will not be the same for everyone at the same time. In other words, there are brands like Mazda, which already has a significant number of cars, and brands that still don’t. Also, this has not been consistent, there are brands that have had their supply of cars at certain times but then they drop again. The problem is that there is no consistency. I think that by mid-2023 we will be in a better situation”.

Inflation, interest rates and purchasing power

The signs of concern are the same for both executives. For the head of AMDA, one must not be carried away by optimism. “Right now we are making deliveries of vehicles that already have authorized credits and sales work, but the high level of inflation and the increase in interest rates are weakening the consumer base and this will be reflected in 2023 in a very low market growth capacity. We are thinking that there will be practically stagnation.”

For his part, the head of Grupo Autofin agrees on the threat of inflation and interest rates. “The inflation that cars have had, which in some cases has been almost 20% and there is also the issue of financing. Let’s remember that 70% of cars are sold financed and the reference rate is already at 10%; any financial will be charging above 15%. This obviously causes the monthly payment, which is what everyone more or less calculates whether or not they can buy it. Because people don’t ask about the rate but about the monthly payment and when it skyrockets there are people who no longer qualify or simply can’t pay it”.

Imposing conditions and waiting

For Olivia Cortés, a resident of the state of Querétaro, buying a new vehicle has not been the most pleasant experience when dealing with conditioning for sale or very long waiting periods.

“I started looking for a new car 4 months ago. The brands I considered were Toyota, Mazda, Nissan and Renault. The first option was the hybrid Toyota Corolla but they told me that there was neither to see nor to deliver but they showed me a Camry and a truck. For the Corolla that I wanted, they gave me a delivery period of 7 months, but it also annoyed me that they conditioned the purchase to make it through financing from Toyota. This was at Bernardo Quintana’s agency and they also told me that they gave preference to credits over cash payments. Then I went to the Toyota of Corregidora and there they did not put conditions on me ”.

He then went to Mazda because he found it attractive that the Mazda2 had a discount in price. He pointed out that the wait they gave him was a maximum of two months and without the obligation of having to pay for self-financing or any other.

“My third option was the Nissan Sentra but there were no cars to show either. This was in an agency that is on Avenida Central, in Ecatepec, State of Mexico because for my work I had to go to Mexico City. Later, in Querétaro they told me that they only had pre-owned because very few units had arrived, here they did not put purchase conditions on me but the wait was 4 months. Although the seller recently called me and told me that the wait had dropped to 2 months. I finally decided on the hybrid Camry that I bought at Toyota de Corregidora, in Querétaro. They gave me a waiting period of 4 months or it could be less, and without purchase conditions. I bought it cash. Regarding the Corolla, which was my first option, they told me that there is none and that the brand even launched a cheaper version of the hybrid Camry so as not to have saturated orders for the hybrid Corolla”.

marcos.martinez@eleconomista.mx