By Brand and Segment: Large incentive or interest rate purchases for pickup. But many Kia, Toyota and Honda models are essentially out of stock.
By wolf richter For wolf street,
New vehicle inventories increased to 1.23 million vehicles at the end of September, which is still down 62% – or 2.13 million vehicles! – As of September 2019, there were 3.45 million vehicles in the inventory, according to data from Cox Automotive,
But it’s not across the board: Some brands offering vehicles with high fuel economy are essentially out of stock (notably Kia, Toyota and Honda); Other brands are adequately stocked or overstocked, especially those focused on full-size trucks and SUVs (Ram and Jeep). Supplies are returning to normal at Ford, Chevy, Chrysler and Dodge dealers. Pickup trucks are now being offered at a great discount off MSRP or the interest rate. Most of the obnoxious addendum stickers at the top of MSRP are gone.
Supplies ticked up to 42 days in late September—enough inventory in stock and in transit to support 42 days of sales. That’s still very low, but higher than the 30-day limit set last summer. In 2019, supply averaged 89 days, and incentives were large, with plenty of deals to be made in that time. Now, overall supply is still far from those 2019 levels, but inventory for some truck models is moving back into that range.
Total sales are still terrible – back to where they first were in the 1970s – Handicapped by shortages in many models, and now perhaps also by skyrocketing prices. Total new vehicle sales declined to 1.16 million vehicles in September, according to data from the Bureau of Economic Analysis. The seasonally adjusted annual sales rate in September was down 21.6% from September 2019.
By brand, from shortage to oversupply.
As a result of the spectacular increase in gasoline prices this year, there has been a surge in demand for fuel-efficient vehicles, which took automakers completely by surprise. Supply chains are long and complex, and production plans are fixed in advance, and production cannot be changed on the spot to accommodate such sudden changes in consumer preferences.
Also, in a move that will go down in automotive history as the best act a Wall Street genius ever did, American brands discontinued their smaller fuel-efficient car models in recent years because they couldn’t make enough money on them. Could not earn The short-termism imposed on Wall Street had won the day. One American automaker after another fell into the trap. Now they have nothing to sell to those customers. Import brands, whose vehicles are mostly assembled in the US and Mexico, are adding to this.
So now the most fuel-efficient vehicles are essentially those sold at dealers. Brands with around a “20 day supply” (like Kia) mean you’ll find almost nothing on many dealer lots, and most of the vehicles they’re showing in “inventory” on their websites are actually in transit. , and many of them have already been sold before they even arrived.
The five brands with the tightest supplies — between 19 days and 27 days — are all “import” brands. But they assemble many of their models in plants in the US and Mexico, which are manufactured in the US, Mexico, Canada, China, Thailand, Japan, Korea, etc.
Kia has the lowest supply: 19.1 days in September, largely unchanged from August. This means that it will be harder to go to your local dealer and pick up a new vehicle that sits on the lot and drive home with it.
Tesla doesn’t have dealers, and therefore doesn’t have inventory on dealer lots, because back in the day when EVs were still scoffed at, Tesla made deals with several states to be exempt from their state’s franchise laws and sell directly to consumers. Succeeded in doing , Any list of this is it’s own list. It doesn’t disclose US sales, and doesn’t disclose its own vehicle inventory. And so Tesla is not on the list.
Fiat and Alfa Romeo (the Stellantis brand) are also not on the list because sales in the US are so low, and the days supply is so large – 120 days for Alfa and 130 days for Fiat – that it would distort the charts. And in America by and large, they don’t matter.
Volvo has overstock with 87.5 days of supply. It is owned by Chinese automaker Geely, and some of its models are made in China. This is the most heavily stocked brand on this list (data via Cox Automotive):
As you can see in the chart above, American brands at least have ample supply now — although some models may still be in short supply. Ram and Jeep are overstocked. Ram started stockpiling large incentives a while ago, and has managed to reduce its supply by three days to 79.6 days compared to last month. Dodge reduced its month-to-month supply by 12.9 days to 66 days, which is substantial. Supplies at Chevy dealers increased 4.5 days month-over-month to 48.4 days, a substantial . Supply at Ford dealers increased by 7 days to 57.1 days; and 12.4 days to 57.8 days at GMC dealers, both returning to normal.
5 sections with major deficiencies.
Five of the 23 major segments had less than 30 days of supply. This is an improvement from August, when seven segments had less than 30 days of supply. At these levels of supply, most vehicles in “inventory” on dealer websites are either in transit or have already been sold.
Four of these five segments are made up of relatively fuel efficient vehicles. The outback is the segment of high-performance cars (22.1 days supply). With an average price tag of $113,770 per Cox Automotive, they are not mass-market vehicles and sell only in relatively small quantities.
|overall rank||biggest deficit segment||day’s supply|
|1||high performance car||22.1|
|3||mid size car||27.8|
11 blocks with tight to adequate supply,
In another sign of improvement, there are now 11 segments with supplies in the 30-50-day range, so from tight to ample, up from nine segments in August.
This group spans a wide range of segments. Compact cars have the tightest supply in this group, and getting tighter: 31.9 days in September, down from 34.2 days in August amid strong demand.
Sports cars are not the same as “high performance cars”. Sports cars — which include cars like the Mazda MX-5 — have an average new vehicle listing price of $47,979, according to Cox Automotive, which is slightly higher than the overall average new vehicle listing price ($46,294).
|overall rank||tight to ample supply segments||day’s supply|
|7||Luxury Full-Size SUV/Crossover||36.0|
|10||midsize pickup truck||39.9|
|1 1||Subcompact SUV / Crossover||40.1|
|12||Mid-size SUV / Crossover||40.2|
|13||entry level luxury car||41.4|
|14||Full Size SUV / Crossover||42.8|
|15||Luxury Mid-Size SUV / Crossover||43.6|
7 segments with adequate or more than adequate supply.
The big feature here is full-size pickup trucks—a huge, super-popular, and incredibly profitable segment in the US. Americans love to pay big bucks for pickup trucks, willingly giving up sizable profit margins to automakers. Last year, if you could even find full-size trucks on dealer lots, they often came with crazy and obnoxious aftermarket stickers on top of MSRP. No one should buy at those prices. The buyers’ strike last year would have stopped those frauds. but that did not happen. Last year, people who wanted to buy a truck paid whatever it was, as the inflationary mindset took hold, and customers paid whatever the dealers charged.
This era is now over. The full-size trucks segment is now the second largest supply segment with 64.5 days, up from 59.2 days in August.
In another sign of improving inventories, there were seven volumes in this category of 50+ days’ supply in September, up from five volumes in August.
|overall rank||Adequate or Over-Supplied Segments||day’s supply|
|19||Luxury Compact SUV/Crossover||54.3|
|20||full size car||61.0|
|21||high-end luxury car||62.6|
|22||full size pickup truck||64.5|
|23||Luxury Subcompact SUV/Crossover||70.0|
Discount and interest rate shopping is back.
I just checked around San Francisco Bay Area dealers. Incentive and interest rate Purchase rate rates may vary by state or territory. So here are some examples.
Ford dealers in the Bay Area are now offering buyout rates for 2022 F-150s on 60-month loans at 1.9% APR, the same dealers who put stickers on these trucks for an additional $5,000+ last year.
And at Ram, big discounts replace obnoxious aftermarket stickers:
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