Decline in new vehicle inventories, close to a record level. Fuel-efficient cars are disappearing. But supply of full-size pickups and SUVs is growing, shrinking sets to move iron

Average prices jump relentlessly from record to record.

By Wolf Richter for WOLF STREET.

Inventories of new vehicles on dealer lots and in transit at the end of July fell from the previous month and remain stuck at the same awfully low levels they have been all year, limiting sales, frustrates dealers and discourages customers. This scarcity continues to push prices to new highs.

But the composition of these stocks is changing with burning demand for fuel-efficient vehicles depleting inventories of minivans, subcompact cars, compact cars and midsize cars to non-existent levels, while inventories of full-size pickup trucks and SUVs are piling up , and some brands have reached very high levels, at the top of which are Ram 1500 trucks with a worrying 88-day supply.

At the end of July, there were just 1.09 million new vehicles in inventory at dealer lots or in transit, the lowest since February, and in the same desperately low range all year, according to data from Cox Automotive. That was down 70% from July 2019! Some vehicle segments are nearly sold out, and inventory is building up in other segments.

The supply of days at the end of July fell to 37 days, compared to 38 days in June, as in January. For comparison, in 2019 the supply averaged 89 days.

Essentially out of stock: small fuel-efficient vehicles. A 20-day supply, which includes in-field and in-transit inventory, means many dealerships are essentially out of vehicles when you show up to buy. Here are the top-selling segments with around 20 days of supply, according to data from Cox Automotive:

  • Minivans: 20 days
  • Intermediate cars (Camry, Accord, Malibu, etc.): 20 days
  • Subcompact cars (Accent, Spark, Versa, etc.): 20 days
  • Compact car (Civic, Elantra, Corolla, etc.): 24 days

Suddenly a lot of supply: large vehicles. 50+ day supply. So overall the supply is plentiful. When the supply reaches 70 or 80 days, there is too much supply. There are 88 days of Ram 1500 pickup truck supply.

Some of these segments (particularly pickup trucks) were very hot during the pandemic when fuel prices were low. But this year, fuel prices have reached the pain threshold and vehicle purchasing preferences have adjusted. Top-selling segments with 58 days supply or more:

  • Full-size SUV (Expedition, Yukon, Wagoneer, etc.): 50 days
  • Full Size Pickups (Ram 1500 = 88 days, F-150 much tighter): 51 days
  • Full-size car (Avalon, Stinger, Chrysler 300, etc.): 61 days

Is it time for that $10,000 off-MSRP ad for the Ram 1500? Instead of those heinous MSRP-plus-addendum prices? Oops, it’s happened before. Results may vary, but I just checked with one of my local Ram dealers, and they had five Ram 1500 Quad Cab and Crew Cab in stock, model year 2022, and after various factory and dealer discounts and discounts , the advertised price was $3,000 to $9,000 below MSRP. This part is back to normal.

Sales handicapped by the shortage of what is in demand. Offer is subject to inventory and sales. At the end of July, inventories were very low overall, but there were virtually no inventories of fuel-efficient cars which are suddenly in high demand, while inventories of full-size pickup trucks and SUVs are piling up, demand has weakened.

So overall inventory was very low and sales were horribly low, hampered by this odd mix of inventory shortages and bad inventories.

Shortages of specific microcontrollers and semiconductors that the auto industry uses for mundane things on a vehicle continue to slow production and trigger plan halts and production cuts.

Industry has tried to keep factories going by building vehicles with certain components missing and storing them until the missing component arrives. For example, at the end of June, GM had 95,000 unfinished vehicles on storage lots. This would represent 8% of total sales in July that did not occur because the vehicles, although built, were not completed and could not be sold.

There’s starting to be a glut of chips used in crypto-mining rigs, PCs, and smartphones, but it’s not the specialized chips and microcontrollers that automakers use.

Only 1.128 million vehicles were sold in July, according to data from the Bureau of Economic Analysis. Compared to July of last year, when inventory was already a problem, sales were down 12%. Compared to July 2019, when inventory was plentiful, sales were down 19%.

These are sales levels first seen in the 1970s – horrendous sales in a horribly mature industry plagued by inventory shortages:

Average prices keep jumping from record to record. The average transaction price jumped 12% year-over-year to a record high of $48,182 in July. The average listing price jumped 11% year-over-year to a record $46,400, according to data from Cox Automotive.

In dollar terms, over the past 12 months, the average listing price has jumped $4,600; and in the past 24 months it has jumped $8,159. These kind of price hikes, on top of already sky high prices, it’s crazy when you think about it. And eventually, people are going to think about it, but apparently not yet.

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