Running on Empty

February 23rd, 2022 by Nathan Hobbs

The New Car Shortage Unwrapped

By Chris Collier

The average price of a new car in the U.S. reached $47,077 in December, according to Kelley Blue Book. The Irvine, Calif., vehicle valuation and research company noted that the average price rose just below $1,800 in 2019, slightly over $3,301 in 2020 and then a significant increase of $6,220 in 2021. The COVID-19 pandemic and persisting supply-chain problems contributed to the rise. An ongoing global shortage of microchips—critical components needed for today’s autos—also continues to slow down manufacturers’ production of new vehicles. Hawaii’s T&T Tinting Specialists typically averages 300 cars per month for a local Toyota dealer. That number is down more than 80% to 50-60 a month.

No New Cars

CEO Tommy Silva says his company started feeling the effects in November and December. What’s the timeline for alleviation? Silva says dealerships don’t expect normalcy until May or June of 2022, which could pose a problem. “Our business is 50% automotive and 50% flat glass,” Silva says. “Of the automotive [work], 25% of our revenue is dealership tinting, so that’s where we’ve been feeling it.”

Make it Shine Detailing in Ontario, Canada, focuses primarily on paint protection film (PPF). An estimated 80% of its sales stem from the product. Owner Kaval Vilkhu has seen his clientele evolve.

“I’ve seen a shift in the last six months,” Vilkhu says. “I’ve seen more people bring me enthusiast cars to protect. All these new collector cars are going up in value. I’ve been doing a lot of enthusiast cars like Corvettes and older Hondas and Porsches. I think the limited supply of new cars has resulted in some people going after enthusiast cars and them wanting to get those done.”

Charles Culp is a tint specialist at Sun Stoppers Greeley in Greeley, Colo. He observed a lack of new cars rolling into his shop, but says it hasn’t affected overall volume due to the number of used vehicles serviced. “I would say probably a 65-35% split—65% being newer vehicles. It used to be closer to 75% for new vehicles [in 2019].”

Chris DiMinico owns Protective Solutions and AutoNuvo in Holliston, Mass., a city approximately 25 miles from Boston. Eighty percent of the company’s automotive film work extends from dealerships, but the shortage’s impact is unexpected. The company is seeing more business in the $30,000 to $50,000 car range.

“We’ve seen a slight drop off, but we’ve seen an uptick in throughput from some dealerships that we weren’t doing a ton of work with. We were doing three to five cars a month with the Hyundai dealership. Now people are spending, on average, $7,500 premiums to buy a car over the Manufacturer’s Suggested Retail Price (MSRP). We’re doing 15-22 new Hyundai’s a month and have picked up two new Hyundai dealerships.”

A Vicious Cycle

Jason Young, owner of Solar Tint in Cincinnati, Ohio, says the shortage is driving fewer pre-loaded tint jobs to his bays. He speculates that the reason could be dealerships feel less pressure to bolster inventory with such high consumer demand. “You can tell when [dealerships] get shipments,” Young says. “[The amount of work] will go from being steady to being slammed with whatever brands seem to be coming in. If Toyota gets a shipment, you see a run of those.”

Ultimate Auto of Orlando, Fla., specializes in PPF, window tint, ceramic coatings and paint correction. The company hasn’t felt a pinch due to a focus on exclusive, high-end vehicles such as the Mercedes-AMG GT Black Series and the Ferrari 812 Superfast. Head PPF installer Tony Kiger put a deposit on a new 2021 GMC Sierra 1500 AT4 eight months ago and has yet to pick
it up. The truck was built on June 8, 2021, but there are no chips available for the truck’s technological functionality. While working at Porsche South Orlando during COVID-19’s spring 2020 arrival, he observed a lull.

“They weren’t getting in new cars, so they had no cars to sell aside from used inventory,” Kiger says. “Most of those used cars were already rock-chipped and damaged. No one cares to apply film to the front-end of the vehicle because it’s already damaged. Unless they’re going to re-paint it and then have it wrapped.”

Future Forecast

The new car shortage is an immediate threat to the automotive film segment, but the pandemic’s arrival proved this industry’s adaptability. Companies have gotten creative to combat empty car lots. T&T Tinting Specialists has re-assigned automotive staff members to flat glass projects to stay on track.

“Luckily, we’ve been blessed with a bunch of contracts for several buildings at the same time,” Silva says. “That helped us keep everybody employed and not have to furlough anybody or anything like that. Especially through the holidays, we hate to do that. We’ve kept everybody busy even though we’ve had this slump.”

As the past two years have shown, this world is as unpredictable as ever. What developments spell potential danger for the automotive film segment? The topic has been on Vilkhu’s mind lately.

“I’m curious to see where public policy goes around vaccination,” Vilkhu says. “I don’t know how that’s going to impact the accessibility of our services to people, especially for somebody like myself that’s mostly retail. I don’t do any wholesale work. Physically, are there going to be restrictions in the future for people being able to bring their cars to our shops?”

Look on the Digital Side

There’s a lot that can go wrong in the automotive film industry, but there’s also a lot that can go right. Mike Norng, general manager of Automotive Film Specialists in Houston, Texas, says his glass-half-full industry outlook pertains to electric cars.

“I’m focused on electric cars because they don’t pre-load them,” Norng says. “These guys are buying them like it’s eBay. They’re buying them online. They don’t come with PPF, window tint or any accessories, so that’s the reason we’re focused on that. If you’re [working] with a privately-owned dealership, they already want to take the aftermarket accessories in-house.”

Silva sees a similar trend where Tesla owners share ideas and knowledge, leading to more sales.

“They do their due diligence,” Silva says. “They’re online all the time. They order their cars online, so they’re researching everything on the Tesla forums. They see what other Tesla owners have done with paint protection and ceramic tinting. We’ve had people show us a forum and say, ‘This guy came here last week. He did this, this and this. I want the same thing.’ We don’t even have to sell them—they’ve already sold themselves.”

Rick Puthoff, owner of Eclipse Window Tinting in Cincinnati, Ohio, believes the automotive industry’s transition to a digital-buying format has the power to propel the segment. Akin to Christmas, he says car enthusiasts will feel more compelled to protect vehicles after a more personal buying experience.

“If they know they’re getting the iPhone, it’s not as special an experience when they unwrap that box,” Puthoff says. “When they unwrap it and it’s a surprise, it’s the same human feelings we get that I think will cause them to protect it and keep it longer. I think they’re going to be forced to keep it longer because when you want a new vehicle, you’re going to have to order it.”

Chris Collier is the assistant editor for Window Film magazine. Connect with him on LinkedIn and Facebook.
ccollier@glass.com

To view the laid-in version of this article in our digital edition, CLICK HERE.

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