Hot Wheelz Auto Sales

Skylar Hall (left) discusses purchasing a car with John Facciani, owner of Hot Wheelz Auto Sales on Goucher Street. The vehicle depicted was already reserved. Hall said he’s visited several dealerships, but all are showing signs of a car shortage. Aug. 12, 2020.

From his office at Hot Wheelz Auto Sales, owner John Facciani could see all of his inventory in the lot – a mere three cars. And two of them are held for customers. 

He usually has an inventory of 12 to 15 used cars. Now, there’s so much empty space in the lot that he’s put up caution tape so that people don’t drive haphazardly through his business. 

“The shortage is all around now,” he said.

COVID-19 may be driving people crazy as they search for a reasonably priced used car.

After the economic shutdown from mid-March to May, dealerships reopened and sales boomed through July. But as those vehicles sold, there was little new or used inventory arriving from companies or other dealers.

As Facciani spoke about the shortage, Skylar Hall, of Johnstown, and his family entered, looking for a reliable car for this winter. 

“We’ve been looking for cars here, in the West End – everyone is running out,” Hall said.

“It’s definitely a shortage. It’s hard to find a quality car out there.”

Facciani said new car dealers are holding onto trade-ins to sell, because they don’t have new inventory.

Factories that had been shut down for months have not caught up with demand for new cars. And some dealers in the area send cars to auctions to the highest bidder rather than selling them to local used-car dealers.  

‘Little inventory’

The change in supply happened quickly.

“There are cars I sold in May that would now cost $2,000 more apiece than they were then,” he said. “Now prices are higher than they have been in the past three or four years.” 

COVID-19 slowed down manufacturers of new cars dramatically, said Mike Smith, owner and chairman of Laurel Auto Group.

Laurel Auto Group sells new cars and provides customers’ trade-ins to local used-car dealers – including Facciani. 

Smith described the used-car shortage as “severe” and caused by a void at the top of the supply chain.

“Car manufacturers are only going to be able to manufacture 85 to 90% of what they had forecasted,” Smith said. “They lost two months of manufacturing, and you can’t just get that time back.

“We’ve never seen this little inventory at this time of the year. We are having a difficult time securing new product to sell ourselves. We are holding onto a few cars that are trade-ins.” 

And what’s perplexing to Smith also, is that people who are buying new cars are trading in old cars at a much lower rate than usual.

“They are maybe selling it to a neighbor or giving it to a child – I’m not sure,” he said.

“But they not trading them in to us.” 

‘Have to sell something’

With a dearth of new cars, dealerships are competing for used cars, said Tim Dougherty, owner of Terra Car Co. in Richland. That is driving up the prices drastically. 

He said “little guys” in the used car business like him have no chance at online auctions that are dominated by bigger used-car companies such as Carmax, as well as new car dealerships that are resorting to selling newer used cars.  

“They are buying up the used-car market,” Dougherty said. “New car stores are spending a lot of money to get them. They have to sell something because they are so big.”

Dougherty said he was looking two months ago at a lease-return Chevrolet Silverado pickup truck that was auctioned online at a starting price of $22,000. It had been driven 29,000 miles.

He thought the price was too high then. Now the price has increased by $10,000, he said. 

“The same truck, with the same mileage is now going for $32,000,” he said.  

“I can’t justify paying that. You just can’t do it. They aren’t worth that much. If we get shut down again, then you have $32,000 in a truck that is going to go back down to $22,000. If you have five vehicles like that, then you lose $50,000. But big dealerships can afford to lose that.” 

Dougherty’s inventory has shrunk from 20 to six vehicles.

He won’t buy cars at the prices they are currently selling for – even though it means he may not make any money next month. 

“There’s a big shortage,” he said. “You can buy cars, but you will pay way too much.

“It’s going to be like this until new cars start selling again, until they make them again, or until winter when people quit buying.” 

Dougherty forecasts a slow year for used-car salesmen.

He said he was fortunate that his business has been established since 1999. His debt is paid.

“Prices are out of sight,” he said. “I don’t know how many smaller guys are going to be able to stay in business.”

Russ O'Reilly is a reporter for The Tribune-Democrat. Follow him on Twitter @RussellOReilly.

 

Recommended for you