Due to vehicle shortages, even though sales have skyrocketed, the new vehicles still need more inventory.
According to estimates by Cox Automotive, based on its DealerTrack data, a total of 1.13 million new vehicles were present in dealer lots at the end of May compared to 2.68 million vehicles from the same period in 2019. The average number of vehicles in inventory in 2019 was 3.66 million.
The buying patterns have been pushed away from the most profitable models because, at the beginning of 2021, the gasoline prices have pounded too almost double. The then production priorities of the automakers were full-sized SUVs and pickup trucks.
But, after the shortage of semiconductors, they had to shift their focus toward compact SUVs and economical vehicles.
Soon after this shift, the dealers realized that the small stock of such vehicles they have now is the wrong one. But unfortunately, no one in the auto industry was prepared for this shift of buying patterns, due to which economical vehicles have been left out.
While 60 days are considered “moderate” in terms of supply time, because of this shift, it had dropped down to 34 days. So, for instance, the average supply in 2019 was 90 days.
But the vehicles that automakers prioritized, which included full-sized SUVs and middle and large-size pickups during the semiconductor shortage due to the large profit margins they gave at once when sold, still have got themselves a dense inventory.
A big elephant in the room in the US in terms of EVs, “Tesla,” isn’t made a part of this article because it lacks dealer inventory meaning. It only discloses its inventory and sales globally and doesn’t disclose its US sales or inventory.
Due to the semiconductor shortage, the legacy automakers that all came out with their own EVs are facing the same inventory issue due to the shortage of semiconductors. As a result, they lack a supply chain, due to which they lack production and sales.
According to data from the Bureau of Economic Analysis, the last period when the dealers still had inventory was the spring of last year. It was emptied due to the high number of sales in those months. For reference, in May, the new vehicle deliveries rose 29.6% from the same month last year and 30.2% compared to May 2019.
As the number of imports increased, so did the vehicle prices. According to Cox Automotive Data, within a year, the average listing prices plunged to $45,495, about 12% in May. For luxurious vehicles, it was about $64,282, and for non-luxurious ones, it came to about $42,240. This shift in the industry shook the market hard, resulting in this supply shortage, as no one was prepared for it and it.
Several millions of potential customers are now frustrated because of this, and the number of these angry customers will increase by the end of this year.
