By on August 13, 2019

2017 Subaru Impreza Indiana Assembly Plant - Image: Subaru

The cooling off of the U.S. auto market wasn’t immediately and universally addressed via a production slowdown, but as year-over-year sales losses piled up, automakers began to get in line. Downtime rose, shifts were cut, and the country’s bloated new car inventory began to thin.

August brought the trimmest number of unsold vehicles seen in the past year, but that doesn’t mean they’ll be flying off lots.

Quite the opposite, in fact. According to figures from the Automotive News Data Center, while new vehicle inventory is indeed at a yearly low (just 3,798,400 vehicles), the amount of time it takes to sell an average vehicle is on the rise.

A decrease in sales means the country’s unsold vehicle inventory now turns over, on average, every 71 days. This draws from the 73 days’ supply of light truck models (2,859,600 units) and a 64-day supply of passenger cars (938,800 units). Not since the U.S. was pulling out of the recession — November 2011, to be exact — did the country’s inventory amount to less than a million passenger cars. Expect that figure to sink further as automakers continue pushing small cars into the grave.

The most recent example of companies tailoring production to match reduced demand came at the beginning of August, when Honda cut a shift at its Marysville, Ohio assembly plant, stemming the flow of Honda Accords and Civics.

While the industry posted an estimated sales gain of 1.2 percent in July, the first increase this year, the seasonally adjusted, annualized pace of sales fell to 16.82 million. Last year’s 17.27 million U.S. auto sales represented a high water mark for the industry, one which likely won’t be repeated for some time.

[Image: Subaru]

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19 Comments on “Inventory Dips, but That’s Where the Good News Ends...”

  • avatar

    The good news is that I don’t have any bad news. The bad news is that’s all the good news that I’ve got.-Albert Brooks

  • avatar
    Jeff S

    This is no surprise to me. New vehicle sales have been up for a number of years and cannot be sustained forever. There are only so many new vehicles people will buy with much of the past sales being from pent up demand from many who waited to buy after the 2008 Economic Crisis. Economic cycles go up and down and eventually the US economy will cool off and then go up again.

    • 0 avatar

      Jeff S, I have a slightly different perspective on vehicle sales slowing and that is that people are refocusing on longer term aspects of their lives, rather than a depreciating asset like vehicles.

      Visit some of the money boards to gain a perspective of what people are doing to take advantage of these prosperous times courtesy of the current administration; Paying up Life insurance policies are a HUGE move. Another is paying down Home Mortgages. Yet another is 529 plans for kids going to College.

      I haven’t even scratched the surface.

      Pre-retirees are downsizing their cribs. Growing families are expanding/remodeling their living spaces.

      Transportation seems like an afterthought.

      And people realize that the good times will eventually come to an end.

      • 0 avatar

        You’re right, and you’re not even scratching the surface. The economy is great, people have jobs, and wages are going up, but people are wary.

        A lot of people who went into debt during the long 1985-2008 economic boom (the 1990 S&L crisis and 2000 tech stock dive were blips) were heavily exposed when the 2008 Depress-Recession hit. Many weren’t old enough to experience the 1981-83 double Depress-Recession.

        Now those people are wiser, cleared out debt and are playing today’s good times close to the vest, socking assets away, just in case. Other auto sales booms lasted longer than the current 2015-2019 period, averaging 15 million from 1984-1991, 16 million from 1993-2000, and 16.5 million from 2002-2008. If the past is any guide, the current sales level has a couple-three more years to run.

        The dip is likely due to other factors, like higher prices, people wary of too much debt, tariffs raising the cost of steel for automakers and lowering their margins, while ironically increasing good-paying jobs in the steel industry, and auto execs slowly realizing they can’t get rich selling in the Chinese market anymore, or depend on cheap Chinese auto parts.

        In fact, given the hot market for late model used sedans, the automakers may have created the dip by no longer building compact sedans like the Cruze and Buick Verano, both assembled in eastern Ohio, just across the state line from expanding steel mills! The Federal Reserve’s raising rates in the absence of inflation tightened lending, and is now being reversed, another factor to affect auto sales.

        Overall, I get the impression people are a lot smarter in this boom, and auto executives and the government agencies that affect the economy are a lot dumber.

        • 0 avatar

          Yeah, I agree, “people are a lot smarter in this boom”.

          I was always cautious, even in the last recession. But the economic policies of that era, 2008-2016, affected me and mine negatively.

          No matter how hard I worked, I never got ahead. I saw my lifestyle eroding around me. My healthcare being taken away and/or downsized.

          But those days are behind me (us) now and Happy Days Are Here Again.

          I urge everyone to maximize their efforts to get their financial act together and their financial ducks lined up.

          For these amazingly rich Trump years, too, shall pass. And all to damn soon, as far as I am concerned.

          The past is prologue and we all know what the years BT (Before Trump) were like. I don’t ever want to go back to that again.

          • 0 avatar

            The “boom” really hasn’t “trickled down” to the working class, and there is still plenty of debt out there (long car loans, student debt, etc.).

            As usual, the top 10% (and even more so, the top 1%) are well suited to ride out the upcoming downturn (if not take advantage of it).

        • 0 avatar

          Where do people get the idea that the Verano is still in production? I’ve seen this several times lately. And that it was built in Ohio?

          It went out of production at the end of 2016… In it’s factory in Lake Orion, Michigan.

          Only the Cruze was built in Lordstown.

  • avatar

    New cars are overrated. Automakers are a little too proud of their junk, as if we gotta have it, more than they need to dump it. Prices aren’t terrible, but it’s just some things need to be corrected. Like the long list of options, oops not available on base or basic trim/models. The tail has been wagging the dog for too long.

  • avatar

    With the average new car price approaching something like $40k, it’s getting harder for Joe Average American to even contemplate purchasing a new car (unless they want to hold onto a loan for six or seven years). The two vehicles in my driveway, both bought used, don’t even add up to anything close to that price tag ($16k Dodge GC minivan for use hauling my daughter and dogs around to dog shows (who knew it took so much to run a dog around a ring!) and my newly-acquired Jetta SW bought for $10k). I honestly don’t see me buying a brand-new car ever again.

    • 0 avatar

      ” I honestly don’t see me buying a brand-new car ever again.”

      Some people don’t have that option. Especially old people in need of dependable long-distance transportation for trips to the Mayo Clinic or CTCA.

      Buying used you always buy someone else’s discard, be that off-lease, rental-fleet or private trade-in, much of the time without a factory warranty. That’s OK if you can afford repairs, but often factory warranty is the deciding factor.

      Certified Pre-Owned only means that they certify that the vehicle was owned by someone else before you buy it.

      Most people wish they could avoid the cost of a new vehicle, but the bottom line is….. often they can’t.

      And that could be another reason why so many people choose to lease. You have no equity but it is only money, money you would have to spend on maintenance and repair anyway.

      So why not buy the peace of mind of a three-year lease?

  • avatar
    Jeff S

    @highdesertcat–For me that is true because I am getting ready to retire, but there are still many that have to have that new vehicle. My father, who is now deceased, had little interest in cars and would keep his vehicles well past 10 years. I have paid off everything and have a huge retirement plan that I have contributed the maximum contribution to. Many of the younger generations are not buying new vehicles. What I said still holds true in that increase sales of new vehicles cannot be sustained without a downturn. I also don’t find most new vehicles that desirable and most of the electronics I could live without. I tend to buy most of my vehicles new but if I know the history of a preowned vehicle then I would buy used.

    @DenverMike–Most new vehicles are overrated and beyond the electronics there is not much else. Smaller turbo engines and CVTs are not something that I get enthused about.

    • 0 avatar

      Jeff S, All the best on your upcoming retirement. Be sure you have a plan to keep busy.

      Your comment about your dad brought to mind my best friend who kept his ’93 S-10 Tahoe ExtCab 4.3L for 27 years, and then parted it out. He said he couldn’t afford to let it go before then because he had sunk so much time and money into it to keep it running all those years. I can attest to that – on some things I helped him.

      Surprisingly, he made a lot of green parting it out.

      I am taking into account the real possibility of a future downturn and recession, but I’m hoping it won’t be until after Jan 2025, if Trump gets re-elected.

      If Trump does not get re-elected next year, I’m bracing myself for life in Ensenada, Baja California, Mexico.

      Hey, they got a Wal-Mart there. And the dollar goes a lot further there then it does in the US of A.

      Am taking all the necessary financial steps now for travel and life abroad.

  • avatar
    Jeff S

    You never know what will happen. Just hope if we do get a Democrat that they are not the extreme left in which case I might be joining you in Mexico.

  • avatar
    Peter Gazis

    highdesertcat/Jeff S.

    Vio con dios! / Go with God!
    No shortage of people that want to come to the U.S. by leaving you just open up spots for 2 more.

    • 0 avatar

      Peter I hate to disappoint you, but I maintain residences in El Paso, TX, Dog Canyon, NM, San Diego, CA, Scottsdale, AZ, Highland Ranch (South Denver), CO, and of course now the Villa in Ensenada, BC, Mexico.

      Aside from our own residences we also belong to Diamond Resorts and Eldorado Resorts where we spend a lot of time each year at different Resorts.

      And then there is my sister in Vancouver, BC and my sister in Tel Aviv, Israel, each who has asked us to come visit them more often. We did a couple of years back, and they still want to see us again.

      No, we have plenty of places to spend our time and our money away from America’s Open Border policy that encourages drug trafficking, human smuggling and MS-13 gang-related crime the sanctuary states so richly deserve.

      I continue to be amazed at how many Americans (who can) choose to live outside of the US. I meet them everywhere, even in the most unlikely places like Sao Paolo, Brazil, Germany, Portugal, The Netherlands, and even Merry Olde England.

      Remember, under the next ‘crat president, open borders will be the norm.

  • avatar
    Jeff S

    @Peter Gazis–I didn’t say I was definitely leaving. As for spots opening up I doubt you have worry about that with all the people from Central America seeking asylum.

  • avatar
    Peter Gazis

    Cars usually sell better in the spring and summer.
    Trucks usually sell better in the Fall.

  • avatar

    highdesertcat – that’s the way I’m looking at it also, 70 years old, wrenching days no longer wanted/needed! So long as I can get a reasonable monthly lease payment on a decent ride, however I’m finding that the low monthly lease offers advertised, the dealers never have them in stock, they always have the ones that sticker for a few thousand more thus pushing up the monthly payment – Grrrrrrr!

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