US brands gave up on cars. Now their trucks are piling up. Asian brands dominate cars and have shortest supply. And prices are too damn high.
By Wolf Richter for WOLF STREET.
New vehicle inventory has been on a consistent upward trend all year and rose again by the end of November, from the woefully low levels last year when inventory had been depleted by the semiconductor shortage and other supply-chain snags. Subcompact cars, compact cars, and mid-size cars have very little supply amid a surge in demand – and they’re dominated by Japanese and Korean brands, since US brands threw in the towel on cars a few years ago. But other segments and brands have ample supply or are overstocked. And full-size pickup trucks, which were red-hot a year ago, have been piling up.
Inventories of new vehicles at the end of November rose to 1.64 million vehicles, the highest since April 2021, up by 81% from a year ago, according to data from Cox Automotive. But compared to November 2019, new-vehicle inventory was still down by 54% – or by 1.91 million vehicles.
New vehicle sales were still dismal – now handicapped by a complex mix of factors, including prices that are too high, and a fairly sudden shift in demand from big vehicles such as pickup trucks, which were red hot during the pandemic, and which automakers prioritized building amid the chip shortage, to fuel-efficient vehicles, particularly cars.
These shifts were big enough to move the needle: For the 2022 model year, in terms of vehicles produced for sale in the US, the overall miles per gallon increased by 0.9 MPG, to a record of 26.4 MPG in 2022, the biggest year-over-year increase in 10 years.
And so dealers are having the wrong stuff, and it’s overpriced, and sales just cannot recover and wobble along at levels first seen in the 1970s.
In November, 1.159 million vehicles were sold, according to data from the Bureau of Economic Analysis. Though this was up by 10% from the even more dismal sales a year ago, when dealers were essentially out of stock, it’s still down by 20% from November 2019, which had already been a lousy month:
Days’ supply – due to this combination of relatively low inventories amid dismal sales – has been rising and is closing in on “healthy” levels in aggregate.
Supply at the end of November rose to 53 days, the most supply since February 2021, and double the supply in August and September 2021.
About 60 days supply is considered “healthy” in the industry. In 2019, inventory had been piling up and sales had slowed, which caused supply to average 89 days, and caused automakers to throw large-scale incentive programs at the market to move the product.
So on an aggregate basis, supply is still low but is starting to return to healthy levels. The problem now is that across some brands and models, there is nearly no supply, and across other brands and models, particularly US brands and large vehicles, there is oversupply.
Supply by brand.
Supply varies to a very large extent by brand, but have been rising nearly across the board.
Among the non-luxury brands, Toyota and Kia had the lowest supply of 26 days (up from the 16 to 20-day range a few months ago). Honda had 34 days, Subaru 38 days.
Among the luxury brands, Lexus had the lowest supply with 26 days, followed by Land Rover (33 days) and BMW (37 days).
A whole slew of brands had over 60 days supply. Some had about 90 to 100 days, which means overstocked: Lincoln, Volvo, Jaguar, Ram, and Dodge. And three had over 100 days supply: Infiniti, Jeep, and Buick.
Tesla doesn’t have dealers and therefore doesn’t have inventory on dealer lots. And it doesn’t disclose its own inventory. So Tesla is not included here (data via Cox Automotive).
Supply by segment.
What sticks out is that the most fuel-efficient vehicle segments – compact cars, subcompact cars, and mid-size cars – have the lowest supply amid the sudden shift in demand, when gasoline prices started surging last year, while automakers were prioritizing their high-dollar big vehicles that were red-hot during the pandemic. The long and complex supply chains, which were already strained from the semiconductor shortages, could not accommodate the shift.
In an ingenious move that still baffles my mind, compact cars, subcompact cars, and mid-size cars are the segments that US brands, under intense and idiotic pressure from Wall Street, have largely abandoned over the past few years; and have handed their share to Korean and Japanese brands – most of them made at factories in the USA and Mexico. And they’re now totally dominating the segments.
Full-size pickup trucks now have 77 days supply. In that group are Ram trucks. The brand, which also makes vans, has 94 days’ supply. And it includes Dodge trucks. That brand has 96 days’ supply:
Prices are too damn high.
The average new vehicle asking price rose to a record $46,823 in November, according to Cox Automotive. But the increases have slowed from the red-hot pace last year. In November, the year-over-year increase was only 3.9%, and in October it had been 3.6%, the slowest year-over-year increases since March 2020, following a blistering price spike during the pandemic: Since February 2020, asking prices spiked by 25%:
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