There were approximately 1.13 million new cars for sale in the United States at the end of June. If automakers stopped building new cars, it would take dealers about 25 days to sell them all at the current sales pace.
According to Kelley Blue Book parent company Cox Automotive, that is the shortest supply since record-keeping began in 1976.
It’s also a sharp collapse in a short time. At the end of May, national supply stood at 1.78 million vehicles or 35 days’ supply. One month prior to that? It was 2.24 million, and 44 days.
Microchip Shortage to Blame
Americans have been buying cars much faster than automakers can produce them. A worldwide shortage of microchips has slowed the production of many popular models.
The average new car uses several dozen tiny processors that control everything from when the transmission shifts to the speed of the air conditioning fan.
During the height of COVID-19-related travel restrictions in 2020, consumers weren’t buying many cars. Automakers trimmed their orders for the chips.
But, forced to work and attend school electronically, many consumers went on a personal electronics buying spree. That used up much of the available supply of chips, and the microchip industry has not caught up to demand. When travel restrictions lifted and Americans began car shopping again, microchip producers couldn’t meet the surge of orders.
So new car production slowed. But travel restrictions lifted, the economy began to recover, and Americans went car shopping.
Sales Pace Slowing Down Thanks to Lack of Choices
The sales pace is actually slowing. But that may not be due to a slip in demand.
Cox Automotive Senior Economist Charlie Chesbrough explains, “The sales pace is definitely slowing, and limited supply is the likely cause.” Though Americans still intend to buy new cars, “there just isn’t enough product available.”
Some Manufacturers Hit Harder than Others
Kia and Toyota dealers have the most empty space on their lots. At the end of June, each brand had about a 15-day supply of cars to sell.
Dealers were down to a single day’s supply of the wildly successful Kia Telluride SUV and all-new Kia Carnival minivan.
Lexus and Land Rover had the lowest inventory among luxury automakers – an average of 17 days’ supply.
Minivans, SUVs, Trucks All Hard to Find
Minivans were in the shortest supply of all vehicle types at the end of June.
“SUVs and crossovers of most sizes and price categories had lower-than-average inventories as July opened. Full-size truck inventory also was lower than average,” Cox Automotive reported. “At the other end of the spectrum, cars, especially large and luxury ones, had the highest inventories as well as electric vehicles and the smallest SUVs.”
