Item 1A. Risk Factors
Item 1A. Risk Factors
Except as set forth below, during the three months ended March 31, 2021, there were no changes to the Risk Factors disclosed in Item 1A. Risk Factors of our 2020 Form 10-K.
We are subject to risks associated with our dependence on manufacturers for vehicle inventory.
The success of our dealerships is dependent on the ability of our numerous vehicle manufacturers, whom we rely exclusively on for the manufacture and timely delivery of our new vehicle inventory. Our ability to sell new vehicles is dependent on our vehicle manufacturers’ ability to manufacture, allocate and deliver to our dealerships an adequate supply of high quality and desirable vehicle selections at the right time in order to satisfy customers’ ever-changing demands. Vehicle manufacturers may be adversely impacted by parts and raw material shortages, including semiconductor chips, if such shortages are not immediately resolved. Currently, vehicle manufacturers are producing and delivering fewer vehicles to our dealerships due to a global semiconductor chip shortage. The chip shortage is impacting the automobile industry’s new vehicle production which has decreased our new vehicle inventory. It is impossible to predict with certainty the duration of the semiconductor chip shortage, but we expect our inventory levels to be low through the remainder of 2021. If our manufacturers’ production remains at current reduced levels or continues to decline, diminishing our ability to meet the immediate needs of our customers, the semiconductor shortage could have a material and adverse impact on our financial and operating results.
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