Who wants a car right now?

MON, APR 26, 2021

YOUR AFTERNOON NEWS UPDATE AND MARKET ACTION FROM CNBC

AS OF MON, APR 26, 2021 • 12:26 ET

DJIA		34032.78
		-0.03%	-10.71

S&P 500		4185.31
		+0.12%	+5.14

NASDAQ		14091.79
		+0.53%	+74.99

EDITOR'S NOTE

Remember my whole thing last year about needing a minivan? Well, thank God we got one when we did. If we had waited even a few months, we might be in the same boat my neighbors are in right now--having their order for a new minivan cancelled on them sixteen weeks after first placing it.

What's going on? Two words: chip shortage. What started out as headlines on CNBC is now morphing into a massive problem in the auto market. Sure, auto dealers might be loving the frenzy of orders right now, as this headline on Reuters suggests, but they're going to be in a world of hurt if they can't get enough cars to meet demand in the months--dare I say, even the year or so--ahead.

Take AutoNation, which has exploded off its pandemic lows. The stock went sub-$30 last March and hit a new all-time high today north of $102. The company--the biggest dealer chain in the U.S.--said its gross profit per new car sold nearly tripled year-on-year last quarter, to more than $2,700, according to Reuters. The company is hopeful this could become the "new normal" in an industry used to offering price cuts of that size to lure buyers.

But will the industry really be able to maintain this kind of forced inventory discipline in the years to come? I'm skeptical. Plus, the historic shortage we're seeing now is also coupled with a unique demand surge that mirrors what we've seen for housing, pools, bikes, and other "suburban" pandemic plays. And that feels to me more like a pull forward than a permanently higher demand plateau.

In any case, it's paying off for the market catering to used vehicles, since buyers who can't get their hands on the new car they want are forced to turn to older year models (or keep driving their current one). Dom Chu will have more on all this in Power Lunch today.

And if you're wondering what my neighbor did, she found a place offering the new hybrid Toyota Sienna she wanted--in Virginia. So her parents drove it up to her. And it's a thing of beauty, and I know the reviews are rave about it, but I'm sorry, I'm still Team Odyssey. Simple reason: the second-row seats can slide horizontally. And until your kid can buckle himself in in the third row, that's a perk I can't live without.

See you at 1 p.m!

Kelly

Kelly Evans
Twitter: @KellyCNBC

Instagram: @realkellyevans

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