Bob Gullage, sales manager at City Honda, says sales are half what they were a year ago, but he expects things to be back on track by the end of the summer. Photo by Daniel MacEachern/The Telegram
Ripples from the earthquake and tsunami in Japan in early March are being felt in St. John's as auto dealerships find their supplies getting tight.
At City Honda on Kenmount Road, sales are half what they were a year ago, said sales manager Bob Gullage, because the disasters have affected production of computer components.
"The cars are not built over there. The cars don't come from there," he said. "The only thing that we're getting from there are components, basically. The two plants that were damaged over there built electronic parts or microchips for new car production. Our factories are still working, but without that key component, it just stops the line. You need the line."
The slowdown in production forced Honda Canada to suspend its normal ordering procedure, where dealerships order vehicles three months in advance. Instead, Honda is doling out allocations of cars and trucks in accordance with the size of the market.
Still, it's not enough at a time of year when people typically look for new wheels.
"Spring market is really really good in St. John's. Once spring has sprung, everybody wants a new car," he said. "If you came on the lot today, you'd see there's not a lot of cars on the lot, because they're being pre-sold, because they arrive sold and we deliver them right away." And if what's on the lot isn't exactly what a buyer wants, it's taking Honda 40 days to deliver the desired colour or package. The 2012 Civic, Honda's most popular model, is in particularly short supply, having just gone into production when the quake hit.
"If you are a new-car shopper, and you're out and you need a new car, most people won't wait 40 days," he said. "They want something now, so they'll choose something on the lot, or buy something else.
Sales staff hit, too
The slowdown has hit sales staff - who work on commission - in the wallet, so City Honda has given salespeople more time off and boosted the commission structure to ease the crunch and to retain employees.
"The lost sales - it isn't their fault," he said. "I've got 10 salespeople here. You're always afraid of people jumping ship in times of crisis - there's lots of successful dealerships here. But all of them have said 'absolutely not. No. We're going to stick it out with you. We're going to work through it.'"
Gullage said production should be back to normal by the end of August, and he is grateful that a lot of their regular customers have elected to wait. Honda has also extended leases for anyone whose terms are up, but can't get a new one due to the shortage.
At Toyota Plaza on Kenmount Road, a bigger inventory when the quake hit meant the dealership has been able to ride the storm out until now, but sales manager Trevor Bradley said they expect to feel the pinch in August.
"It is getting tight. There's no question," he said. "We as a dealership are not affected too much, because we've always had a lot of inventory ... we will feel it tighter, I'm sure, in and around August" as orders that were in the pipeline bump up against the break in production that happened when the earthquake hit."
Lots in stock
"I've got a lot of cars in stock, and we're still managing to hit all our targets and sell all the cars we have, but basically what it means is that the ones that are being built, or about to be built, there's a bit of a backlog and we'll get those eventually," he said, adding that he expects sales to be down somewhat, but not too much. He noted that last year's recall of Toyota vehicles was a bigger challenge, and the automaker wound up with its best year to date.
Over at Freshwater Suzuki, general manager Rob Kinsella said the disaster left them largely unscathed.
"We've actually been lucky, I guess you could say. We haven't had any major production impacts at all. It's been pretty much status quo for us," he said. "Suzuki had decent inventories of vehicles, and where their headquarters and production facilities are in the southern part of Japan, their headquarters and factories haven't been impacted as much as the others."
Since the disaster, rolling blackouts have affected production somewhat, but not significantly, he said, adding the shorter supply at the other dealerships may give Suzuki a bit of a boost from customers who won't wait to get their orders filled. "I'm sure it will. It's got to impact it somehow if people are looking for Japanese vehicles. If one dealer can't supply, I guess they will be continuing to look in that market."
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