New-Vehicle Inventory Tops 3 Million for the First Time Since the Pandemic Even as Sales Gain Momentum

The election is over and decisive. Consumer sentiment, according to Morning Consult, has improved for five straight months and is at the highest level in three and a half years. Indeed, October sales in the automotive industry saw an increase of 13% over the same time last year, and yet, new-vehicle inventory continues to rise.

As the year winds down, we’re seeing some interesting trends in the auto industry. Inventory levels and incentives are rising. At the same time, we’re looking at nearly the highest days’ supply in two years. It’s a bit of a balancing act for automakers as they try to maintain discipline. 

In a measure at the end of October, according to an analysis of vAuto Live Market View data, the total U.S. supply of available unsold new vehicles reached north of 3 million for the first time since the pandemic, which is up 29% year over year. With 3.04 million units available, days’ supply increased to 85 days, which is now 14% higher compared to the same time last year.

As automakers and dealers alike continue to purge older metal and work to keep inventory of current model year vehicles down, holiday bells are already ringing with seasonal discounts. Still, most automakers saw days’ supply increase in the latest measure. Toyota and Lexus, the perennial “tight supply” brands, continue to move product quickly compared to most others. Importantly, Stellantis has succeeded in trimming inventory among its core brands and, in the latest measure, is no longer posting record days’ supply at or above twice the industry average. Ram and Jeep saw notable decreases in days’ supply, fueled partly by higher incentives.

OCTOBER DAYS’ SUPPLY OF INVENTORY BY BRAND

New-Vehicle Prices Remain Persistently High

The average listing price for a new vehicle in the latest report was $48,117, up 0.7% from a month earlier and up 1.8% compared to last year. New-vehicle price inflation has come down to earth, but average vehicle listing prices have stubbornly remained above $47,000 for more than two years now with no sign of relief. If the price trends of the winter of 2023 stick, expect prices to stay elevated through early 2025.

The average transaction price (ATP) of a new vehicle in the U.S. in October, reported earlier this week, was $48,398, up $78 from the month prior and higher year over year by 1.7%, according to Kelley Blue Book. High-priced luxury vehicles have been incentivized the heaviest of late and also have the highest days’ supply. Vehicles priced between $50,000 – $80,000 are averaging days’ supply of 100 days’ supply. Incentives in this category are well above the industry average, nearing 10% of ATP.

In October, industry-average incentive spending rose to 7.7% of ATP ($3,708), up from 7.2% in September and well above the 4.7% reported one year ago. In 2019, the average monthly incentive was just $176 higher, but it represented 10.1% of the average transaction price. With the holiday season upon us, more incentives and discounts are expected to spur on rising consumer demand and deliver continued positive momentum in retail showrooms as inventory levels continue to creep higher.