Kacin Schackne knew he was buying a vehicle that didn’t exist when he ordered a 2021 Ford Bronco for his wife, Jessica, in the fall of 2020.
“It 100% was a ghost,” said Schackne, who lives in San Fernando Valley, California. He and his wife were willing to wait for it to be built. He has been a Bronco fan since childhood; he even learned to drive on the family’s Bronco.
What the Schacknes didn’t expect was it would take two years before they took delivery of what ended up being a 2022 model. The delay, due to higher than expected demand for the Bronco and Ford’s difficulty getting parts as the industry was hit in early 2021 with a global shortage of semiconductor chips, was frustrating, he said.
“Now that I have the car, I feel it was worth the wait,” Schackne said. “Would I have liked to have a 2021 Bronco? Yes. But my wife is very happy with this one and enjoying it.”
In Schackne’s case, Ford was transparent about the status of his ghost vehicle. But the trend of ghost inventory or what some call phantom stock — cars on dealership websites that aren’t available — has washed over the industry in the past year, often leaving customers disappointed or frustrated as they get lured to a dealership for a car they thought was in stock. The problem is a result of supply chain disruptions and parts shortages that have hampered all automakers’ production and led to tight inventory that sells quickly off dealership lots because of high demand.
Ghost inventory is defined as vehicles that are shown on dealership or third-party car shopping websites that do not exist yet for a customer to drive home because they are in-transit to a dealership or in a queue to be built at the factory, industry experts said. Often, there is no firm timeline for when the customer will get it. In many cases, dealers often tag a stock photo of a car on their websites as “in transit”to be up front, but not all do.
In some cases, a car is not tagged as not in stock but instead as coming soon on a website. Customers are lured to the buying process or drive to the dealership to see the car, only to find out the car does not exist.
“This is another one of those things that emerged from the industry troubles we’ve had,” said Ivan Drury, director of Insights at Edmunds.com. “Shoppers were frustrated because people assume things would be the way they always were and the car that was pictured on the website was available right away.”
The National Automobile Dealers Association did not immediately respond to a request for comment.
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Drury estimates 30% to 40% of inventory vehicles across various car shopping or dealer websites are ghosts.
“They’re suspect. Some will and some won’t be labeled as ‘in-transit or not built,’ ” Drury said. “Some may say ‘coming soon’ or ‘in-transit.’ But you can pretty much assume just about everything you’re looking at is not available.”
Drury said he first noticed this phantom stock problem late last year when he “started hearing murmurs of it” and talked to a few car dealers because there were a lot of new-car sales leads, but few closings.
“We noticed that lead volumes were fantastic, but the close rate was going down because the vehicles were in transit and not delivered yet,” Drury said. “So if the dealer had the VIN (vehicle identification number), they were posting it even though it wouldn’t be built and be there in x amount of time.”
And how a dealership handled the “coming soon” status was subjective to each store because there is no standard practice on how to handle the problem given “the industry’s never dealt with” this big of an inventory shortfall before, Drury said.
Some dealerships have been using stock photos of a car that was not at the dealership, but looked like it was, he said. Drury said showing the stock photos helped to populate the website and keep traffic up rather than list only a few new vehicles for sale. In some cases, Drury blamed automated systems for not keeping up with how fast the vehicle arrived at the dealership and removing it as sold from the website.
But it’s not just the dealer side of the equation that is setting unusual trends; customers do it, too, Drury said.
During the pandemic, dealerships have been requesting deposits from potential customers to hold a spot in line for an upcoming car. To outgame the wait, “we’ve also heard of a trend where people are putting $100 deposits with various dealers to see who can get them the vehicle the fastest and that dealer will be the winner,” Drury said.
That practice doesn’t bother most dealers, who know they can easily sell the car to another customer if the deposit holder backs out, Drury said.
Bob Melian is president of Fox Dealer, a company in Pasadena, California, that creates websites and digital advertising for 500 clients, mostly car dealerships nationwide.
Ghost inventory has always existed on a limited level in the past, Melian said. Before the COVID-19 pandemic hit, there were a handful of inventory issues across automakers. But when the pandemic forced an eight-week shutdown across all auto factories in North America, the inventory problems begin to intensify. The production shortfalls and limited inventory was compounded with last year’s various parts shortages and supply chain disruptions.
“So what dealers did, a practice they have disdain for, is show vehicles that were in-transit,” Melian said. “In the past, people would propose that idea and dealers would shoot it down because they don’t want the fight of a customer coming in and saying, ‘You don’t have it?’ But they realized there was nothing in stock.”
So cars that are assigned to the store, that have a VIN, are put on the website and, “honest dealers say it’s in-transit or inbound,” Melian said.
“The manufacturers are as guilty as the dealers. They want this in-transit out there to sell cars,” Melian said. “Historically, there’s been a lot of manufacturers who have said, ‘Don’t show a car you don’t have in stock.’ But a lot’s changed and that’s become more relaxed.”
Typically, automakers keep an arm’s length from their dealers, who are independent businesses and control most of their own operations.
Melian said he estimates less than 15% of dealerships nationwide are showing vehicles on their websites and not disclaiming that they are not in stock and “letting you call in and striking a rapport with you and then saying, ‘Oh that just sold.’ “
Melian noted that customers have changed with the times, too. Two years ago, few would consider ordering a car and waiting months, or even years for it, like the Schacknes did.
“But out of necessity, it’s amazing how quickly you can adapt to change,” Melian said. “The dealer has flipped into this kind of delivery center where more sales are happening over the phone … then customers are coming in later to take delivery.”
Zack Krelle, an industry analyst with TrueCar, said there’s another explanation, too, for the disconnect between what’s on a dealer’s website and what’s really available to buy.
“One of the current challenges with lower inventory is that vehicles are built, shipped and sold at a much faster velocity. They don’t sit around very long. Prior to the shortage, the average time a vehicle sat on a lot was about 65 days. Today, it is closer to 20 days, with some high-demand vehicles, like the Toyota RAV4, in the single digits. Two byproducts of the faster sales pace are that consumers have better visibility to in-transit vehicles and popular models disappear quickly. Both scenarios explain why consumers may arrive at a dealership and find the model not in stock.”
About five months ago, Motor City Buick GMC in Bakersfield, California, decided to be proactive about busting the ghost inventory problem, said John Pitre, chief operations officer of the dealership.
The dealership created a reservation page on its website that lists every vehicle it has on order with General Motors and that are in-transit to the dealership. Pitre said there are about 1,000 vehicles on there.
“We disclose that a vehicle is on order from General Motors and subject to change or cancellation,” Pitre said. “But they build 99% of them.”
The dealership takes a $100 refundable deposit if a customer orders a vehicle and provides “price protection.” That means if there’s an increase in the Manufacturer Suggested Retail Price between the time a customer ordered a vehicle to months later when it is actually built and delivered, the customer gets it for the price when they ordered it.
Pitre called it a “scheme” and “deceptive” when dealerships show cars on their websites but do not disclose that they are unavailable. But he knows why some dealers do it.
“If you only have 10 cars in stock, no one will search you. But if you have 200 cars — you look a lot better,” Pitre said. “Phantom or ghost or make-believe, we said, ‘Let’s just put it out there and be transparent.’ It’s our most visited page on our website now. We get about 50,000 unique visitors per month and, of those, 8,000 went to the reservation page.”
Pitre said the dealership get calls from all over the country, taking about 250 reservations a month and most of those people do take delivery of their ordered cars, eventually.
Closer to home at Matick Chevrolet in Redford Township, inventory of certain GM vehicles is improving and wait times are shortening for customers who do have to order a car.
For example, the store has the Silverado full-size pickup, the Colorado midsize pickup and the Malibu sedan in stock, but “everything else is getting gobbled up,” said Paul Zimmermann, vice president and partner of Matick Chevrolet and Matick Toyota in Macomb. The average wait time if a customer orders a Chevy Tahoe large SUV is about 60 to 75 days, he said. That’s down from a year ago when it might have been as long as 10 months.
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But to avoid any problems of ghost inventory, communication is consistently being reinforced to the sales staff. In weekly meetings, Zimmermann said, “managers hammer home to sales people, ‘You have to be clear, you have to be direct and manage people’s expectations.’ “
Also, he said, when new cars arrive and quickly sell, “our website staff is trying to mark those vehicles as sold or take them down from the site quickly.”
He said sales staff comb through the Chevrolet vehicles that are in-transit or listed as in-build in the system and pre-sell from there, as well, he said.
“It’s a dynamic issue and process,” Zimmermann said.
There are ways consumers can be savvy to spot when a new car is actually in stock and when it’s not, experts say.
“No. 1 is the photographs,” Drury said. “If you see there is no photograph of the vehicle at the dealership or all the photos are the same” those are typically stock photos and the car is not available yet.
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Drury recommends looking on the website for a filter to search for vehicles in stock. Or call or text and ask a sales consultant what is in stock for immediate delivery.
“Don’t look at a site and think they have 100 cars and find out they have 10,” Drury said. “You don’t want to plan your weekend car shopping and find out there are no cars there.”
Melian said call or text the salesperson and ask a simple question: “When can I pick up this car?”
“That will cut through all the mustard,” Melian said. “Let’s say 20% are nefarious and tricking you, once you get on the phone they know the jig is up. Delivery date is the key.”
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Another savvy move is to request a video of the car be sent to you. “That’s an indirect way of saying, ‘Is the car really there?’ ” Melian said, noting most reputable dealers are happy to do a walk-around video of a vehicle.
He said a customer can also request the vehicle’s paperwork before coming to the dealership or ask the dealer for a VIN on the vehicle when placing a deposit to ensure the car will get built. Most importantly, read online reviews of the dealership and other customers’ experiences.
“The car business has improved 100% in the years, but there are still a handful of bad ones and they stick out glaringly,” Melian said. “Kind of listen to your gut.”
Drury said as the supply of parts improves and new car inventories grow, the ghosts will be exorcised to some degree.
“There’ll be some makes and models where it’ll still happen because you just can’t get them,” Drury said. “But later into next year, hopefully this problem will resolve when we see inventories build up.”
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Contact Jamie L. LaReau: jlareau@freepress.com. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletterBecome a subscriber.