There's a giant pile-up down at the Port of Los Angeles. No, not the usual oops between an 18-wheeler and a passenger car on the 710 corridor. It's a pile-up of unsold vehicles.
Thousands of unsold import cars -- everything from SUVs to hybrids, are sitting idle, waiting for dealerships across the country to sell their backlog and replenish. Trouble is, in the worst car market in a generation, nothing's selling. So the car companies have leased vacant land at the Port of Los Angeles (the biggest port in the country) for use as a massive parking lot.
Now it's running out of space. Toyota and Mercedes have quickly leased more acreage, but Nissan couldn't arrange it and had to find parking lot space elsewhere.
"It's unusual that they [surplus cars] would be here longer than a few days, but that's the situation now," a spokesman for the port told Reuters. "They can't move it through their pipeline fast enough so they are asking for additional space while they keep their vehicles here more than a few days, and in some cases more than a few weeks."
On Friday Toyota announced that it was idling factories to cut its North American output. Its inventory is currently at "unacceptably high" levels that would take 80 to 90 days of sales to clear, according to a Reuters report.
Sounds ugly. But almost doable, compared to the 115-day supply of inventory on average for GM, Ford and Chrysler. Good thing the Midwest has lots of open land to park those unsold cars on.
With the financial crisis worsening, It doesn't sound like car sales are going to be improving any time soon. And until production winds down, there will be a lot more surplus piling up at the ports of entry.
Meanwhile, back on the West Coast, I sniff a growth business. Landlords with large, vacant tracts can lease out their land to the car companies for the big bucks. I know the City of Long Beach has tracts of unused (and highly polluted) industrial land just sitting idle. I also know it's facing a huge budget deficit. Hello? Creative ancillary revenue streams? Hey, any port in a storm, right?
Real estate growth industry: Store thousands of unsold cars on your vacant land