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]