As the year continues, the automotive industry in the United States presents a fascinating landscape in terms of new-vehicle inventory levels. After disruptions caused by the pandemic, the automotive industry is navigating the road through recovery and adaptation. We’ll look at the current state of new-vehicle inventories and what the future holds, building on recent analysis by Cox Automotive and Cloud Theory.
Current Inventory Levels
According to Cox Automotive’s analysis, the end of 2023 saw an increase in new-vehicle inventories. The total U.S. supply of unsold new vehicles closed the year at approximately 2.66 million units. This was about 50% higher than the previous year, indicating a solid recovery from the pandemic-induced lows. Despite a mid-month peak of 2.73 million units, strong December sales pulled the inventory numbers back down slightly. While the volume of vehicles was higher, the days’ supply (the estimated time it would take to sell the current inventory) decreased from 73 to 70 days.
Future Projections by Cloud Theory
The data analytics firm Cloud Theory offers an optimistic forecast for 2024. New-vehicle inventories are expected to continue reaching post-pandemic highs. The firm predicts that the average monthly new-vehicle count could increase to 3 million. However, these numbers, while impressive, are still projected to fall short of pre-pandemic levels. This shortfall is primarily attributed to financial challenges among Tier 2 and Tier 3 suppliers, which continue to negatively impact the supply chain.
Rick Wainschel of Cloud Theory notes that supply chain disruptions, although less prominent than before, persist and limit production capacity. This issue will continue to influence inventory strategies across the industry. Incentives are expected to continue increasing as dealers and automakers navigate a landscape of growing supply and stagnant consumer demand.
Electric Vehicles: A Rising Segment
Last year saw significant growth in electric vehicle (EV) inventories. In 2023, the EV share in dealership lots will represent 7.6% of available vehicles, up from 5.9% in 2022. For 2024, industry experts predict the year will see increased incentives, infrastructure, leasing opportunities, and products. While inventories are up, several automakers are reevaluating and adjusting their EV strategies as they wait for consumer demand to catch up with EV inventory availability, infrastructure, and diagnostics.
The U.S. auto industry’s inventory landscape is shaping up to be a mix of recovery, adaptation, and strategic maneuvering. While new-vehicle inventories are rising, they are still grappling with the ripple effects of the past few years. The increased inventories and the expected rise in incentives reflect an industry in transition, responding to changing market dynamics and consumer trends. As these trends unfold, they will offer valuable insights into the future direction of the automotive sector.