Americans are buying cars at a record pace. Meanwhile, automakers are struggling to build those cars, thanks to shortages of critical supplies. With one of the biggest car sales weekends of the year coming up, those trends collide to produce a difficult market for car shoppers.
“The industry is in uncharted territory by trying to maintain robust sales with this low level of inventory,” says Charlie Chesbrough, Cox Automotive senior economist (Cox Automotive is the parent company of Kelley Blue Book).
Record Sales Rate
The seasonally adjusted annual rate of sales (a figure that removes normal seasonal fluctuations to make it easier to compare one month’s data to another’s) sat at 18.5 million at the end of April — the highest rate recorded since records began in 1976.
Low Inventories
Yet, most automakers are carrying lighter inventories than normal. Supply has been trending lower all year. The industry as a whole has 37 percent fewer cars for sale than this time last year. Last year was an unusual one, thanks to COVID-19 lockdowns keeping shoppers home and factories idle, so 2019 numbers may be a more reliable comparison. The industry is holding 42 percent fewer cars at the end of April than in April 2019.
Of course, Americans don’t buy cars from the automotive industry as a whole; they buy specific models from specific companies. There, the data isn’t much different.
Automakers often track supply in terms of “days of inventory” – roughly, the length of time it would take them to sell every car they have built if they stopped building today. The current industry average is 44 days – down 52 percent from 2019 levels.
Toyota, however, has a jaw-dropping 23 days worth of cars to sell. Chevrolet, just 31. Ford, 46.
Fiat and Alfa Romeo brought up the rear with 108 and 93 days, respectively.
Some Popular Models Near Single Digits
Popular models dragged the numbers down to these levels. Toyota dealerships had just 15 days worth of 4Runner SUVs, 17 days worth of RAV4 crossovers, and 18 days worth of Sienna minivans to sell as of the end of April.
At Chevrolet, the best-selling Silverado pickup sat at 28 days supply. The Camaro and Corvette were down to just 11 days each.
Many automakers have been public about their decision to carry lighter inventories indefinitely. But a worldwide microchip shortage contributes to the low-supply issues. Automakers have paused some production lines and reduced others as they struggle to get enough processors to complete each car.
Pickup trucks and full-size SUV – both luxury and non-luxury – were the segments with the lowest inventories. Among them is the Kia Telluride, which is down to just a 14-day inventory. Among the 210 major car selling markets, 83 percent of them report days supply numbers below 20 days for this hot-selling 3-row SUV.
Prices High
A combination of strong demand and low supply pushes prices higher. At the end of April, the average listing price was $39,833 – 7.9 percent above comparable 2019 numbers. For luxury cars, the figure sat at $60,691 – only the second month it has ever held above the $60,000 mark.
Dealers can be confident that a seller will come soon for most cars on their lot, so they find little need to offer incentives. Incentives were down 25 percent from one year ago.
It’s a market that demands patience from shoppers. Those who can afford to wait probably should. For those who can’t, there are still a few bargains to be found – check out our Best Memorial Day Deals.
