Growing but still low new-vehicle inventory declines due to a shift in demand from trucks (now in plenty of supply) to fuel-efficient cars (in plenty of supply)

American brands abandoned cars. Now their trucks are piling up. Asian brands dominate the cars and they are in short supply. And the prices are very high.

By wolf richter For wolf street,

New vehicle inventories have been on a steady upward trend throughout the year and rose again through the end of November, from last year’s lows when inventories were eroded by semiconductor shortages and other supply-chain shocks. Subcompact cars, compact cars and mid-size cars are in short supply amid a surge in demand – and they’re dominated by Japanese and Korean brands, as American brands threw in the towel a few years ago. But other segments and brands have adequate supply or are overstocked. And full-size pickup trucks, which were red-hot a year ago, are piling up.

New vehicle inventories rose to 1.64 million vehicles at the end of November, the most since April 2021, up 81% from a year earlier. Cox Automotive, But compared to November 2019, the inventory of new vehicles was still down by 54% – or 1.91 million vehicles.

Sales of new vehicles were still dismal — now hampered by a complex mix of factors, including high prices, and a sudden shift in demand for large vehicles such as pickup trucks, which were red hot during the pandemic, and which automakers Priority was given to building fuel-efficient vehicles, especially cars amid chip shortages.

These changes were big enough to move the needle: For the 2022 model year, in terms of vehicles produced for sale in the US, the total miles per gallon 0.9 MPG increase to a record 26.4 MPG in 2022, biggest year-over-year increase in 10 years,

And so dealers have the wrong stuff, and too much of it, and sales can’t recover and falter at levels first seen in the 1970s.

According to data from the Bureau of Economic Analysis, 1.159 million vehicles were sold in November. While that’s up 10% from even more dismal sales a year ago, when dealers were essentially out of stock, it’s still down 20% from November 2019, which has already been a lousy month:

This combination of relatively low inventory amid disappointing sales resulted in days’ supply rising and closing at “healthy” levels overall.

Supply increased to 53 days at the end of November, the most since February 2021, and doubled in August and September 2021.

Around 60 days’ supply is considered “healthy” in the industry. In 2019, inventory was piling up and sales were slowing, with supplies averaging 89 days, and automakers had to throw massive incentive programs into the market to move product.

So on an aggregate basis, supply is still low but beginning to return to healthy levels. The problem now is that in some brands and models, there is almost no supply, and in other brands and models, especially American brands and large vehicles, there is more supply.

supplied by brand,

Supply varies substantially by brand, but is increasing almost across the board.

Among non-luxury brands, Toyota and Kia had the least supply of 26 days (up from the 16 to 20-day range a few months ago). Honda had 34 days, Subaru had 38.

Among luxury brands, Lexus had the lowest supply with 26 days, followed by Land Rover (33 days) and BMW (37 days).

There was over 60 days’ supply in a full range of brands. Some had around 90 to 100 days, meaning overstock: Lincoln, Volvo, Jaguar, Ram and Dodge. And three had more than 100 days’ supply: Infiniti, Jeep and Buick.

Tesla does not have dealers and therefore does not have inventory on dealer lots. And it doesn’t disclose its own list. That’s why Tesla isn’t included here (Data via Cox Automotive).

supply by segment,

The most fuel-efficient vehicle segments — compact cars, subcompact cars and mid-size cars — have the tightest supply amid a sudden shift in demand when gasoline prices began rising last year, while automakers prioritize their higher Were staying Big-dollar vehicles that were red-hot during the pandemic. Long and complex supply chains, already grappling with semiconductor shortages, could not accommodate the change.

In a simple move that still boggles my mind, compact cars, subcompact cars, and mid-size cars are segments that American brands have largely abandoned over the past few years under intense and senseless pressure from Wall Street. ; And has ceded its share to Korean and Japanese brands – most of them made in factories in the United States and Mexico. And they are now dominating the segment completely.

Full-size pickup trucks now have 77 days of supply. In that group are Ram trucks. The brand, which also makes vans, has a supply of 94 days. And that includes Dodge trucks. That brand’s 96-day supply is:

The prices are very high.

According to Cox Automotive, the average new vehicle price rose to a record $46,823 in November. But growth has slowed from a red-hot pace in the past year. In November, the year-on-year growth was only 3.9%, and in October it was 3.6%, the slowest year-on-year growth since March 2020, following the price rise during the pandemic: Since February 2020, demand prices 25% increase in:

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