Carmakers, retailers cutting advertising ahead of holiday season due to supply chain issues
Car manufacturers have around one-third the usual stock
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Automobile manufacturers and retailers are looking at a quiet holiday season as they cut promotions during a supply chain crisis that does not appear to be improving.
Inventory has run low following supply chain and production disruptions, leaving companies with around one-third of normal inventory. Automakers have therefore cut advertising ahead of the holiday season.
Cars sit for sale in a Lexus dealership in Greenwich, Connecticut, Nov. 17, 2008. (Reuters/Mike Segar / Reuters)
Pathmatics, a digital advertising platform, estimated that the auto industry has spent 10% less on digital advertising, while analytic firm EDO estimated the industry spent 5% less on broadcast television advertising between late July and the end of October compared to the same period in 2019.
"Winter sales events are such an institutionalized event, that it’s hard not to do them," Kevin Krim, chief executive of EDO, told Reuters. "But if they do their jobs really well, they could make people unhappy if the cars aren’t there. It is a December to forget for the automakers."
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Marc Cannon, executive vice president at AutoNation Inc., said that automakers will be "light" on discount offers as well – a staple of any holiday season.
Retailers across a range of industries – including electronics, toys and apparel – have faced similar issues.
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Department stores, including Macy’s and Nordstrom, spent 8% less on television advertising between late July and the end of October.
Some companies have shifted advertising to focus on products currently in stock, while others have gone for broad brand-name advertising, according to Bret Sanford-Chung, managing director of marketing consulting at KPMG.
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Sanford-Chung explained the supply chain crisis will eventually resolve, and firms want to remain firmly in buyers’ minds when that happens.