New vehicle inventories are stuck at near-record lows, fuel-efficient cars are in short supply, and prices are at record highs.  But the spike in used vehicle prices ends with fuel being in plentiful supply

New vehicle inventories are stuck at near-record lows, fuel-efficient cars are in short supply, and prices are at record highs. But the spike in used vehicle prices ends with fuel being in plentiful supply

Still the weirdest car market ever.

Wolf Richter for WOLF STREET.

New vehicle dealer inventory remains desperately low, but shortages are changing as demand has shifted and supply is now piling up at Ram dealers, for example, and fuel-efficient vehicles are largely sold out. , and electric car models are in for a long run as people get tired of high gas prices.

The number of new vehicles “in storage” on dealer lots and “shipped” to dealers fell to 1.12 million at the end of June. vehicles, ie 70 percent, or 2.61 million of vehicles compared to the same year in 2019. period. Cox Automotive, according to Dealertrack. On this basis, new vehicle inventories have not improved since December. For comparison, in 2019 new vehicle inventories averaged 3.66 million.

The term “inventory” refers to what is “in stock” and what is “in transit”. And this may include units that have been pre-sold. On a dealer’s website, vehicles in their inventory typically have three labels: “in stock,” “carrying,” and “sold.”

Relentless jump in new car prices.

Average asking price (list price) indicates that dealers are not yet in the mood to make offers. According to Cox Automotive, the average list price in June rose 11.5% from a year ago to a record $45,976.

Cox also said asking prices “started to pull back a little bit” in the last week of June. So, traders may be facing some price resistance in certain corners of the market.

Asking prices fell in January, February and March, and in April turned around – some of it was seasonal, with January and February being the worst months for traders, with volumes tending to drop from December. By June, they had reached a new record of 11.5% year-over-year growth. This still speaks to a hot undersupplied market:

Average transaction price According to JD Power, the price at which vehicles were sold and delivered jumped 14% year-over-year and in June. hit a record $45,844. Compared to 2019 in June, that’s an increase of 36% or more than $10,000.

At these prices, dealers earned a record gross profit per vehicle delivered. Including finance and insurance (F&I) sales, dealers earned an average of $5,123 in gross profit per vehicle, up $1,174 from 2021, according to JD Power estimates. in June

The chart shows ATP for December and June of each year. Prior to the pandemic, seasonality was established, with ATP peaking in December but falling annually in June. However, in 2020 in June ATP was flat for the first time in December. And in 2021 and 2022, the ATP simply jumped from December to June, regardless of seasonality. December is connected by a green line:

Lack of fuel efficient vehicles. There is no shortage of Dodge & Ram dealers.

Plenty of Supply for Dodge and Ram Dealers: Including in-stock and in-ship items, Dodge dealers ended June with 90 days of supply and RAM dealers with 81 days. The industry considers 60 days to be the ideal between short and sufficient.

Fuel-efficient vehicles are essentially dead. At the bottom of the luxury segment offerings were Asian brands with economy models largely out of stock: Toyota Corolla, Kia Telluride, Toyota Camry, Hyundai Palisade and Kia Sportage.

At the bottom of the supply by segment:

  • Hybrids, supply 17 days
  • Mid-size cars, 22-day supply
  • Compact cars: 24-day supply.

The supply of full-size pickup trucks is growing: Three pickup trucks and two SUVs topped the 30 best-selling models: Ram 1500 (79 days), Ford Escape (69 days), followed by Jeep Compass, Ford F-150 and Chevrolet Silverado”.

Now it’s a new inventory problem: Inadequate inventory. 2020 and 2021 pickup trucks were especially hard to come by and everyone wanted them. But then gas prices skyrocketed and suddenly the cost of refueling became a buying consideration, and pickups lost their edge. Demand has shifted to more economical vehicles.

However, long and complex supply chains prevent automakers from being able to make instantaneous changes to changes in demand. And supply problems caused by semiconductor shortages have taken on a new dimension as demand shifts to more fuel-efficient models for which automakers were unprepared.

Used cars: plenty.

Used car dealers stock of 2.46 million of vehicles at the end of June, increased by 5.5% compared to a year ago. Compared to 2019, it decreased by only 10%.

However, sales were lower for several months compared to 2021 and 2019 as buyers began to resist high prices. At the end of June, days supply rose to 49 days, only slightly higher than in 2019, given the slower sales pace. average (48 days).

Used Vehicles: Running out of gas due to crazy price spike.

From 2019 December. until 2021 As of December, the average asking price for used vehicles increased 42%, or $8,300 per vehicle, over the two-year period, from $19,871 in 2019. December. to $28,205 in 2021 December. finally began to push.

By June, the average asking price had dropped to $28,012, slightly below December. Declines in January, February and March are seasonally normal, but not in May and June. And the seemingly completely insane price spike may have finally run out of fuel.

However, there is still no oversupply. The entry of rental fleets into the used vehicle market has been held back by a lack of production of new rental vehicles, and they are also slower to replace their fleets. And wholesale prices, although down from their peak in December, are still high. In this environment, dealers are not yet motivated to lower prices to move the equalizer. But at least the price spike has run out of fuel.

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