Is the worst of the auto inventory shortage over for Baton Rouge?

August 23, 2023

After struggling with tight supply levels for the past three years, local car dealer Matt McKay, of All-Star Automotive, is optimistic that the worst of the inventory shortage is over.

“Car sellers, we’ve been through a lot over the years,” McKay says. “But I think we’ve been through the worst of (the inventory shortage); I think it’s going to get better.”

Inventory levels for cars started tightening when manufacturing plants curbed production during the pandemic. Once manufacturers were ready to boost production again, they had to grapple with a microchip shortage.

McKay estimates he is currently carrying about 60% of his “normal” inventory levels for new vehicles.

McKay began construction recently on a used car supercenter at the corner of Airline Highway and Coursey Boulevard. That dealership will specialize in luxury cars, McKay previously told Daily Report, and was driven by the shortage of new car inventory.

Still, some experts around the nation are concerned that many consumers can’t afford their auto loans and that car prices might be unsustainable for buyers, reports the Wall Street Journal. For the average American, paying off a new car at current prices demands 42 weeks of income, up from around 33 before the pandemic.

Defaults and missed payments on pools of auto loans made in the first half of last year to people with subpar credit are matching or outpacing those issued in 2008, according to an analysis published last week by S&P Global that called the data “ominous.”

Despite a rising price tag for vehicles, McKay is optimistic that buyers won’t be priced out of closing on new vehicles. The market is still competitive, he says.

This story originally appeared in an Aug. 22 issue of Daily Report. To keep up with Baton Rouge business and politics, subscribe to the free Daily Report e-newsletter here.