Potential Port Strike Threatens U.S. Car Dealerships, Raises Costs
The anticipated work stoppage by dockworkers at East and Gulf Coast ports poses a significant threat to car dealerships nationwide. According to industry experts, an extended port strike could severely delay the arrival of new car inventory, leading to increased costs for consumers. The delay would not only make purchasing new cars more expensive but also hinder maintenance and repair services due to a shortage of essential parts and materials.
The International Longshoremen’s Association, representing 45,000 dockworkers, is currently in negotiations at 36 U.S. ports from Maine to Texas. These ports handle approximately half of the country’s seaborne imports. The association has indicated that its members are prepared to strike if a new contract is not secured by the October 1 deadline.
Brian Moody, executive editor at Autotrader, advised car owners to preemptively address any current repair needs. "If a person has a repair or a recall or something that they’re aware of now, I would make the appointment and get down there today if possible," he recommended.
Tom Maoli, owner of Celebrity Motor Car Co. based in New Jersey, contrasted the current situation with the pre-pandemic norm. Previously, dealerships like his would typically keep three to six months of inventory on their lots. As of now, they only maintain 30 to 45 days’ worth of inventory. Maoli stated that if the ports shut down, they would run out of stock within a month.
Moody added that even cars manufactured domestically often rely on parts from overseas, further complicating the supply chain. He noted that even if 95% of a car is assembled in the U.S., the remaining parts still need to be imported.
In response to the anticipated shortage, Maoli suggested that dealerships would likely focus more on selling used vehicles. However, the limited inventory of both new and used cars is expected to drive prices up significantly.
Maoli highlighted another concern: the potential difficulties in obtaining parts needed for vehicle repairs. "The interesting thing about the car business is that if you’re holding off on purchasing, you need to repair [your car]. You need tires, you need brakes… you got to keep your vehicle running," he explained. With parts becoming scarce, customers might have to wait 30 to 90 days for replacements.
Moody pointed out that essential car components like tires and certain designed-to-wear-out parts would also be affected. "Even reliable cars have parts that wear out," he noted, explaining that these parts are not indicative of reliability issues but are engineered to require eventual replacement.
In preparation, Maoli’s dealerships are stocking up on extra parts. However, with other dealerships across the country adopting similar strategies, supplies are expected to deplete quickly.
Moody reiterated the urgency for car owners to service their vehicles before the potential strike. "If a person has a repair or a recall or something that they’re aware of now, I would make the appointment and get down there today if possible," he recommended.
The impending strike is spotlighting the fragile nature of the supply chain in the automotive industry and is likely to have a substantial impact on both the availability and cost of vehicles and parts.