Bloated Auto Inventories Deflate Slightly
Due to weakening new-vehicle sales, the United States was staring down the barrel of near-record inventories a couple of months ago. Encouraged by the factory to ensure their lots were filled with the latest wares, dealers have watched their margins evaporate as employees and customers drowned in the sea of metal parked out front.
While still uncomfortably high, U.S. inventories started creeping back down in May. By the end of the month, the number of vehicles waiting to be adopted fell below 4 million for the first time since the beginning of 2019.
Dealers and automakers opened June with an estimated 3,992,100 vehicles at the ready, according to figures compiled by Automotive News. The 65-day supply is reportedly on par with last year’s figures and represent a marked improvement over the 78 days from last April.
From Automotive News:
Automakers and dealers opened June with an estimated 1,022,500 unsold cars, a 59-day supply that represents about 26 percent of total inventory.
No automaker or brand had less than a month’s supply of inventory, with Subaru again running the leanest levels.
Meanwhile, a pair of Fiat Chrysler Automobiles vehicles marked the opposite ends of the inventory spectrum on June 1: Dealers had just a 10-day supply of the Dodge Grand Caravan but an industry-worst 254-day supply of the Fiat 500L.
Despite appearing to have put on its blinker to turn the corner, the U.S. is still coping with sizable inventory bloat. While many are making direct comparisons to the build up of new vehicles that foreshadowed the Great Recession, the reality is that most automakers are doing substantially better at present. Unfortunately, we doubt that has provided much comfort to the dealerships that are taking this on the chin. Lackluster sales, factories shying away from incentives, and rising interest rates aren’t doing them any favors.
[Image: Bell Ka Pang/Shutterstock]
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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I wonder how many lots are full of unsold cars and trucks that won't ever be sold and how much premium that adds to the MSRP of new cars that are leased or purchased.
It feels like a different story with used inventory. On an impulse I went car shopping this weekend and all the abundant models I saw earlier in the year were hard to find. Maybe inventory swells seasonally...