The average price of new vehicles jumped $5,000 from a year ago to $45,495.
Inventories of new vehicles at dealerships are still desperately short, even though sales have fallen due to the shortage of vehicles. It was given now for over a year, and it hasn’t gotten better, and depending on who’s talking, it might get a little better, or it might get worse, if that’s even possible.
The number of new vehicles in stock on dealer lots remained at 1.13 million at the end of May, down 70%, or 2.68 million vehicles, from the same period in 2019, according to estimates from Cox Automotive, based on its Dealertrack data. In 2019, the vehicle stock averaged 3.66 million vehicles.
But now there’s a new problem
Gasoline prices that have doubled since the start of 2021 have shifted buying habits away from the previously hottest and most profitable models – pickup trucks and full-size SUVs – that automakers had prioritized in their plans. from production as they battled semiconductor shortages and supply chain chaos, to economy cars and compact SUVs.
And now dealers are finding that what little inventory they have is the wrong inventory. Economy vehicles have now all but disappeared. No one in the industry was prepared for this shift in buying habits.
Supply has fallen to 34 days, remaining in the desperately low range, while 60 days is considered “healthy”, meaning quite tight but sufficient, and 70-90 days is more common. In 2019, the supply averaged 90 days.
The problem of poor inventory due to unexpected changes in shopping habits, compounded by lengthy supply chain delays, has also affected apparel retailers and other retailers, who are now finding themselves short of certain items and overstocked on other items, as consumer preferences had shifted in the meantime.
Inventory by vehicle category
Inventories of compact, hybrid and midsize cars have all but disappeared, with supplies in the range of 18 to 23 days. Note that “inventory” includes vehicles that are still in transit or still waiting to be prepared. When you go to a dealership with a brand that still sells compact cars and midsize cars – Ford and GM have been killing their models for the past few years, and import brands love it – you will hardly see any of them in the field.
But stocks of full-size pickups, midsize pickups and full-size SUVs are starting to pile up in inventory. These are the vehicles that automakers favored during the semiconductor shortage because of their big profit margins, while they cut production of other models. According to the brands, stocks of pickup trucks are still very tight (FORD) to abundant (RAM).
Tesla is not included here because it has no dealers. It sells directly to consumers and has no “reseller inventory”, and does not disclose its inventory in the United States, and does not even disclose its sales in the United States, only worldwide sales, and only on a global basis.
But Tesla is the elephant in the room in the U.S. when it comes to EVs, and with its inventory and sales data undisclosed, the majority of EV activity is not included. in the data here.
Mainstream automakers are now all coming out with their own models of electric vehicles, but they’re all having trouble making them due to shortages of semiconductors and the time it takes to speed up supply chains for models. entirely new, even in normal times, and the number of electric vehicles they sell remains low.
Many electric vehicle models have long waiting lists and there is virtually no inventory. But because sales are just a patchy trickle, the days supply data, which is based on that patchy trickle of Tesla-less sales, can get erratic, and there’s not yet been a meaningful buildup of electric vehicles in stock.
Very high-end vehicles, sold in dribs and drabs, are in a similar situation to electric vehicles and come with erratic supply figures, even if only a few vehicles are in stock and few are sold.
Sales plunge: out of stock and bad inventory
Given these inventory shortages, May new vehicle deliveries fell 29.6% from May last year and 30.2% from May 2019, to just 1.1 million. vehicles, where they were in the 1970s and 1980s, according to data from the Bureau of Economic Analysis. Last spring was the last time dealers still had inventory. Relatively strong sales during these months depleted this inventory.
Given the stock shortages, no one knows for sure what the real demand would be, if there were enough vehicles for sale, because for the past year potential customers have left dealer lots in frustration because there is no there was nothing to buy, or they ended up buying a used vehicle because that’s all there was, while others placed orders and waited patiently for months for their vehicle.
This market remains strangled by supply issues – and these issues have been compounded by the shift to more economical models, when no one in the industry was prepared for this change.
The price spike
The average listing price in May rose 12% year over year to $45,495: for non-luxury vehicles at $42,240; and for luxury vehicles, at $64,282, according to data from Cox Automotive. The year-over-year increase in listing prices has been around 12% since last summer and roughly in line with the CPI for new vehicles.
This means that the average new vehicle has cost nearly $5,000 more over the past 12 months, which is another indication that there is strong demand amid complicated and changing new vehicle shortages.
Right now, there are several million frustrated potential customers who didn’t buy because there was nothing to buy; and there will be more by the end of 2022. These buyers will turn into pent-up demand when supply reappears. Some of them are already on waiting lists, with their orders pending. This is not a sign of weak demand, but a sign of shortage of supply.
Editor’s note: The summary bullet points for this article were chosen by the Seeking Alpha editors.