Editor’s note:What I don’t understand is how come all the other TV commercials urge the viewer to buy a new car? Another thing, how come dealers are more profitable than ever and selling for more?
Atlanta GA On May 18, 2022, Cox Automotive reported that new vehicle inventory barely moved in April due to continued supply chain disruptions, according to a Cox Automotive analysis of available inventory data from vAuto. Inventories of imports and small fuel-efficient models were among the lowest due to strong demand driven in part by higher gasoline prices. Prices in April also rose, with the average new-vehicle listing price again climbing above $45,000.
to May 2, 2022
Average listing price
Total U.S. supply of unsold new vehicles available stood at 1.13 million units at the end of April. This compares to March’s revised available supply of 1.10 million vehicles. Inventory has hovered around this range for months.
The supply available at the end of April was down 40% compared to the same period in 2021. In gross figures, the supply of 1.13 million new unsold vehicles at the May opening was around 800,000 vehicles less than supply a year ago, when the global chip shortage became evident, and 2.2 million less than in 2020.
“The chip shortage began to disrupt vehicle production a year ago around this time. The percentage differences for inventory and day supply will look less dramatic from here, but that doesn’t mean that the situation has improved significantly,” said Charlie Chesbrough, senior economist at Cox Automotive. “New vehicle inventory remains stuck in that 1 million to 1.1 million range, well below historical norms.”
Days supply of unsold new vehicles was 36 days in early May, up from the revised 34-day supply in early April and about the same general range as the market has seen since mid-January. Day supply at the start of May was 40% lower than at the start of May a year ago.
Non-luxury inventory totaled 955,293 units coming in May for a 35-day supply, about the same as April. The luxury supply stood at 168,872 units, against 156,104 units a month earlier, units for a 38-day supply.
Cox Automotive’s day supply is based on the daily sale rate for the most recent 30-day period, in this case, the period ending May 2. In April, new vehicle sales fell 19% from year-ago levels and fell 2% from March. This brings the seasonally adjusted annual sales rate (SAAR) to 14.3 million, an improvement from 13.4 million in March, but a far cry from the 18.3 million a year ago.
Sales do not represent demand, which is strong. Lack of inventory is dampening sales as the industry faces multiple supply chain disruptions. In China, the surge in COVID-19 cases has triggered lockdowns and factory closures. The shortage of chips continues as well as the shortage of other parts. The war in Ukraine, the main source of wiring for European automakers, also disrupted production, especially of German vehicles.
Prices have started to rise again
The average listing price – or asking price – started to climb again in April, closing the month at $45,171, an increase from the revised end-March price of $44,436.
Listing prices began to decline in the first weeks of 2022, but increased in the last two weeks of March and throughout April. Listed prices are now 12% higher than the previous year’s levels.
Average luxury vehicles rose slightly to $65,179 at the end of April, from $64,278 at the end of March, according to data from Cox Automotive. The average non-luxury list price reached $41,758 at the end of April, compared to $41,246 at the end of March.
The average transaction price – the price paid by buyers – has also started rising again in April to $46,526, according to data from Kelley Blue Book, after hitting a record high in December 2021. Average transaction prices rose 0.7% in April, an increase of $304 from March. The average transaction price is up 13% or $5,354 compared to April 2021.
“As long as inventory remains limited, we expect prices to remain high, as evidenced by higher asking prices and transactions in April,” Chesbrough said. “Price growth rates may look improved in the coming weeks as they will be compared to a year ago when prices soared due to the onset of the chip shortage.”
Import brands, fuel-efficient models have low inventory
In terms of vehicle segments, hybrids and fuel-efficient small cars and SUVs had the lowest inventories due to strong demand caused by rising gasoline prices and the discontinuation of production of these models, based on Cox Automotive’s analysis of vAuto’s available inventory data.
the Kelley Blue Book Brand Watch Reports for the first quarter, in which gasoline prices first rose, showed that fuel efficiency has become more important to consumers than it has been for the past five years. Car purchases versus SUVs and trucks are at their highest level in years. Among non-luxury buyers in the first quarter, 37% considered a car, well ahead of 31% in the previous quarter. Luxury car purchases also edged up. One in four consumers have purchased an electrified vehicle – either a hybrid or EV.
Among the segments, compact cars had the lowest inventory, after low-volume performance cars. Hybrids, small SUVs and midsize cars also had low inventories. Large luxury SUVs also had low inventory as demand for premium vehicles remains very healthy. Of the segments with the highest inventories, most were luxury and larger cars. Full-size trucks also had higher inventories.
Brands with lower-than-average inventories were imports, including those that make hybrids and smaller cars. Among non-luxury brands, Kia, Honda, Toyota and Subaru had the lowest inventory. Low-supply luxury brands included Porsche, Land Rover and Lexus.
The brands with higher inventory were primarily national brands with Stellantis’ brands – Dodge, Ram, Chrysler and Jeep – at the top end. Audi, Volvo, Lincoln and Buick also had above-average supply.
Among the 30 top-selling models in the United States, those with the lowest inventories were mostly imports, particularly Toyota and Honda-branded models. At the bottom were Honda CR-V, Subaru Crosstrek, Honda Accord, Kia Sportage and Toyota Corolla.
Among the top 30 selling models, the highest inventory was primarily made up of domestic full-size pickup trucks and SUVs, including the Ram 1500, Chevrolet Silverado and Silverado HD, and Ford Escape and Explorer.
In terms of price categories, the under $20,000 had a limited stock of under 6,000 units available and a 34-day supply. The $20,000 to $40,000 category had a 28 to 30 day supply. had the highest volume supply. The $40,000 to $50,000 category was the second highest in terms of supply with a 38 day supply, and the $50,000 to $80,000 categories had a 42 to 45 day supply.
More information is available from Cox Automotive on New Vehicle Inventory, using a 30-day sales methodology to calculate day supply.
Michelle Krebs is an executive analyst at Cox Automotive.