- Car shopping may be a little easier as average new car prices fell in March and manufacturers’ supply levels are hitting post-pandemic highs, according to Kelley Blue Book.
- Across the industry, Cox Automotive data shows an average of 56 days of supply, with domestic manufacturers such as Stellantis achieving more than 100 days of inventory.
- Many foreign manufacturers continue to struggle with a 30-day supply, and industry experts warn that prices may not continue to fall for much longer.
You can put your price-conscious eyes back on their sockets and stop calling dealerships in Iowa and Wyoming, people. After nearly three years of high prices, higher inflation and joyless Craigslist scrolling, there may be some light at the end of the car sales tunnel. However, we won’t be surprised if you’re scarred by atrocious marks and empty lots.
Either way, new and used car sales, as well as total industry supply, are finally trending in the right direction, as Cox Automotive data for March and the first few weeks of April show . In fact, the average price paid for a new car in March fell below the sticker price for the first time in more than a year. This type of decline was documented at dealerships across the spectrum, with Chevrolet, Chrysler, Dodge, Ford, Hyundai, Kia, Nissan and Volkswagen showing average sales price declines between 0.2% and 3 .8% in March, according to Kelley Blue Book. .
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This slow decline in prices was documented earlier this year by the Consumer Price Index statistics, but it appears that the rate at which prices have fallen is increasing. And industry experts say the reason for this change is clear: supply is increasing. While some manufacturers still struggle with production, many have regained their footing, increasing dealer lot availability and lowering sticker prices as a result.
“During March, we saw sales surpass the 1 million mark in a 30-day period for the first time since early September 2021,” said Charlie Chesbrough, senior economist at Cox Automotive. “The higher sales have been driven, in part, by improved inventory, which has been around 1.8 million or so in recent weeks.”
That’s an average of 56 days of supply to US dealers, which is up 58% compared to the same time last year. Domestic brands are taking the lead, with Stellantis claiming 119 days of Ram supply and General Motors’ Buick with 117 days of inventory. Jeep and Chrysler also stand out in production, with inventory leveling at around 100 days. By comparison, Ford’s Q1 supply was well above the industry average of 60 days, while Chevrolet continues to have around 30 days of inventory.
Some national brands are approaching inventory levels they consider too high, leading to idle plants and increasing incentives such as rental offers, Chesbrough explained. But not all manufacturers are clear when it comes to production numbers. Foreign brands such as Toyota and Kia continue to struggle with less than 30 days of inventory, although supply levels at Honda, Subaru, Hyundai and Volkswagen also fall below industry standards. Even luxury brands like Lexus, BMW and Jaguar Land Rover are struggling, all falling below 30 days of inventory.
What does all this mean for someone trying to buy a car today? It depends on the type of vehicle they are looking for. Full-size pickup trucks had the most supply by far, with Ram, Ford and Chevrolet offering 80 to 100 days of supply, while popular crossovers like Toyota’s RAV4 and Subaru’s Crosstrek are moving too quickly for the supply to be replenished.
Despite declining demand for sedans, even Toyota is struggling to maintain more than a 30-day supply of its classic sedan, the Camry. Analysis of data from Kelley Blue Book notes that brands like Honda and Kia continued to see dealer profits of 3% to 6% on the sticker price in March, likely as a result of these production issues.
Profits will continue as long as dealers can get away with it, but the overall downward trend in prices means that even brands with low inventory are selling for less. That indicates a more buyer-friendly market could be on the horizon, but Deloitte’s forecast shows the future remains uncertain.
Price is the key factor in car-buying decisions for consumers, but automakers have yet to reach pre-pandemic production levels at a time when the process is simply costing more money. In the future, moving to a world full of electric vehicles will help reduce complexity and costs, but the current mix of ICE and EV production poses serious cost risks for both manufacturers and consumers.
Did you buy a car during a previous period of economic downturn or industry instability? Please share your experiences and thoughts below.
