Fleet’s largest independent vehicle re-seller seeing unprecedented shortages – and paying highest used vehicle prices – in generations
(FOR RELEASE – MAY 18, 2021) – The fleet industry’s largest independent vehicle remarketer – FLD Inc – said today that it was seeing the global chip shortage beginning to have negative consequences for the fleet industry, which – like most sectors – is trying to recover from the devastating effects of the global pandemic.
According to an expert for the company – a leading remarketer for more than 40 years – the pain “could just be getting started,” for fleets, which currently have over 20 million vehicles plying America’s roads.
The problem according to Bill Bishop, Senior Vice President of Sales and Marketing for FLD Inc is an alarming shortage of new vehicles, and a reluctance to part with existing – often aged – units. That’s not surprising given that there have been 1.3 million less vehicles manufactured in the US during the first 3 months of 2021 alone according to industry consultants IHS Markit.
For Bishop, a 30-plus year veteran of the fleet industry, the problem staring fleet in the face comes down to a simple law of supply and demand. The average vehicle has upwards of 3,000 semi-conductor chips running various systems. If manufacturers can’t find enough chips, that means they have to limit production. When that happens, new vehicles become scarce, leaving fleets scrambling to keep up with exploding demand, and finding new ways to get more out of the vehicles they already have.
Thus far, the shock waves from the chip shortage have been unprecedented. From vehicle production lines shuttered at manufacturers from Kansas City to Beijing to some auto manufacturers being forced to horde chips. And several even halting production on cheaper offerings. Even scarier, no one’s quite sure when the chip shortage will end – or if it even will. Especially considering that two of the world’s three biggest chip makers – Taiwan Semi-Conductor Manufacturing and Samsung – have indicated that they are sold out of chips for the rest of 2021, and most likely for all of 2022. That’s not good for the fleet, which is experiencing explosive demand for basically every vehicle from final mile delivery to semis to work trucks and executive cars.
Complicating matters even more, there simply aren’t enough chip-making machines to keep up with worldwide demand and no easy way to build more of them. Even worse for fleets? The vehicle industry accounts for a paltry 3% of the global chip market, meaning more lucrative industries like handheld devices, computers, and electronics get first priority from chip manufacturers anxious to maximize profits.
The chip shortage has been especially devastating to fleets given that most are still either reeling from the effects of the pandemic or trying to figure out how to operate in a post-pandemic world. But without new inventory, there’s no way to ramp up a business or replace aging vehicles, most of which are usually retired from service – and sold through remarketers – every 4 to 8 years.
According to FLD, while its access to used vehicles is the lowest it’s been in years, it’s been paying record prices to vehicle sellers as the market heats up. That presents a double-edged sword for the company, which assumes all of a seller’s risk by paying them up-front for used vehicles instead of after remarketing them.
The resulting dynamics are something Bishop says the remarketing space has never experienced, nor probably ever will again.
“At this point, we’re advising our customers to be mindful, but to also realize this won’t last forever, and that if they need the operating capital or to lighten their load, there’s never been a better time to sell used vehicles and equipment,” Bishop said.
FLD Inc is America’s largest independent vehicle remarketer and has been a pioneer – and leader – in the fleet industry for more than 40 years. It is the only remarketer that assumes all of a fleet vehicle seller’s risk by giving them a quote in hours and paying them upfront for the full price they agree to in less than a day. No hassles, no hurdles – just one simple, seamless transaction that improves total cost of ownership, stops lease payments and leaves sellers free to move on to more important things faster. For more information, please visit our website at www.fldinc.com, or call for a no-obligation quote at 1 (800) 754-1522 today.
To register for a free quarterly copy of Bill Bishop’s White Metal Market Report – an in-depth look at the factors and forces affecting the medium-duty and final mile truck market, just send an email to [email protected].
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