Report: Vehicle Supplies Remain Historically Low

Matt Posky
by Matt Posky

While new-vehicle inventories have been on the rise this year, we’re still below the average supply levels witnessed prior to 2020. But we're getting closer.

A recent report from Automotive News, stated that the vehicle inventory for the United States is somewhere around 2.89 million. This is based on an earlier estimate from Cox Automotive, which pegged average inventories at roughly 2.86 million in 2023 — up from 2.5 million in 2022.

While this leaves The U.S. with a 74-day supply on average, not all manufacturers are hitting that number. Stellantis brands were all said to have at least 119 days worth of supply and Jaguar was said to be sitting on over 150 days worth of vehicles.

Everyone appears to be getting rather excited about the prospect of automotive prices falling. The assumption is that great deals will soon be plentiful. But the historic marker for this happening has always been bloated vehicle supplies and we just aren’t there yet.

Part of this is due to complications incurred during the pandemic. Supply chains took a staggeringly long amount of time to normalize after everything was effectively paused in 2020. But the entire industry has also gradually pivoted to just-in-time manufacturing protocols after seeing Toyota enjoy decades of solid success. While the tactic certainly has advantages, it’s highly reliant upon a strong supply chain and ultimately reduces the number of vehicles one would typically have on hand.

Automakers also appear to be continuing to push higher-priced vehicles with larger margins, rather than trying to meet demand for their more-affordable models. Though this may simply be the result of consumers finding themselves unable to afford the former and manufacturers falling behind with no competition capable of taking up the slack.

From Automotive News:

There were fewer vehicles available priced under $40,000, with about a two-month supply, than above that level, where supplies ranged from 74 to 94 days.
Among the seven automakers reporting monthly sales and inventory, only Volvo Car USA saw its days' supply increase in May from the previous month, according to the Automotive News Research & Data Center, with Ford Motor Co. the only automaker to end the month with more than a two-month supply. Toyota Motor North America was the only automaker among the seven to report less than a one-month supply.
The seven automakers collectively had a 30-day supply of cars and a 45-day supply of light trucks, both declines from the previous month, according to the data center.

Cox has likewise been exploring how dealerships are coping with the situation. Anecdotally, your author has been seeing a lot of lots looking extra full as we go into the summer months. But the reality appears to be that inventories are just now catching up to the levels we would have called normal just a few years ago.

Regardless, dealer surveys have indicated that the majority see the market as quite weak right now. Pricing remains rather high, inventories are rising, and consumers seem to be turning away from more expensive automobiles. Customer surveys have likewise shown that shoppers are largely opposed to the tech found inside modern cars and expressing concerns that production quality has declined in recent years.

In the immediate future, dealers say they are dismayed by a weaker-than-normal tax refund season, high interest rates, and potential fallout from the 2024 election.

Joe Biden has vowed to stay the course with electrification and do whatever is required to swiftly pivot the United States toward EVs. Meanwhile, Donald Trump has mocked the global shift toward electric vehicles and said he would deregulate the automotive industry so that manufacturers could provide a wider variety of automobiles, including traditional gasoline vehicles.

There is a lot of uncertainty in this market, leaving consumers and dealers alike unsure of the road ahead,” stated Cox Automotive Chief Economist Jonathan Smoke. “On top of uncertainty about interest rates, we are heading into an election season, and this one is especially breeding more concern. In the auto business, uncertainty is the enemy — it negatively impacts sales, hurts consumer sentiment, and leaves auto dealers feeling troubled.”

But it’s not all bad news, at least where the industry is concerned. While consumers may be fretting over historically-lean inventories and what new regulations may or may not be around the corner, manufacturers are still coming down from the profit bonanza enjoyed after inventories shrank. Cox believes today’s weakening demand will be short lived and that most brands can probably endure a little hardship.

“Overall, dealer sentiment is likely worse than actual market conditions,” noted Smoke. “While profits are down from all-time highs, we still believe the dealer business is healthy. Retail vehicle sales have been fairly consistent so far this year, inventory has returned to reasonable levels, and we believe interest rates have likely hit a ceiling. With a good job market, the market is not collapsing, and we believe weak current market sentiment is more about uncertainty than actual performance.”

Your author remains a little more skeptical and assumes present trends will continue until the industry starts offering more competitively priced vehicles and the economy improves. But we’ll see how things shake out in the coming months.

[Image: Mikbiz/]

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Matt Posky
Matt Posky

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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  • 3SpeedAutomatic 3SpeedAutomatic on Jun 20, 2024

    I'm at that the inflection point of do I continue to putting money in a 12 yr old SUV entering a heavy maintenance cycle or start shopping.

    I have noticed comparable new SUVs with $2.5k knocked off the sticker price, but still with the shenanigans of $300 for nitrogen in the tires.

    However, I have noticed the same 2 yr old SUV which are only $4.5K less than the original sticker price. Usually the used cars price should be 35% to 40% less.

    This tells me there's a stronger market for used as opposed to new. Part of this is to handle the monthly note. Considering installments of 72 months, you'll never pay the beast off.

    Just wait till the end of the model year which is just two months away, and I think the comparable new SUV will come with larger markdowns. May not be the color you want, but there are deals to be made. 🚗🚗🚗

  • ToolGuy ToolGuy on Jun 23, 2024

    Personally I have no idea what anyone in this video is talking about, perhaps someone can explain it to me.

  • V16 2025 VW GLI...or 2025 Honda Civic SI? Same target audience, similar price points. Both are rays of sun in the gray world of SUV'S.
  • FreedMike Said this before and I'll say it again: I'm not that exercised about this whole "pay for a subscription" thing, as long as the deal's reasonable. And here's how you make it reasonable: offer it a monthly charge. Let's say that adaptive headlights are a $500 option on this vehicle, and the subscription is $15 a month, or $540 over a three year lease. So you try the feature for a month, and if you like it, you keep it; if you don't, then you discontinue it, like a Netflix subscription. In any case, you didn't get charged $500 up front the feature. That's not a bad deal.In my case, let's say VW offers an over the air chip reflash that gives me another 25 hp. The total price of the upgrade is $1,000 (which is what a reflash would cost you in the aftermarket). If they offered me a one time monthly subscription for $50 to try it out, I'd take it. In other words, maybe the news isn't all bad.
  • 2ACL A good car, but - at least in this configuration -not one that should command a premium. Its qualities just aren't as enduring as those of Honda's contemporary sports cars. For better or worse, this is a formula they remain able to replicate.
  • Jalop1991 I just read that Tesla's profits are WAY down "as the electric vehicle company has faced both more EV competition from established automakers and a slowing of overall EV sales growth." This Cadillac wouldn't help Tesla at all, but the slowing market of EV sales overall means this should be a halo/boutique car. Regardless, yes, they should make it.
  • FreedMike It's just a damn shame that Alfa never conquered its' quality demons in time for the Giulia and Stelvio to hit the market - these are loaded with personality, and we need more product like that.