Nonetheless the strangest auto market ever.

By Wolf Richter for WOLF STREET.

The stock shortages at new car sellers proceed unabated, and inventories stay desperately low, however the shortages are shifting, as demand has shifted, and there may be now provide piling up, for instance at Ram sellers, whereas fuel-efficient automobiles are primarily bought out , and EV fashions have lengthy ready lists – as persons are uninterested in getting hammered by excessive gasoline costs.

The variety of new automobiles in “in inventory” on supplier heaps and “in transit” to sellers dipped to 1.12 million automobiles on the finish of June, down by 70%, or by 2.61 million automobiles, from the identical interval in 2019, in line with estimates by Cox Automotive, based mostly on its Dealertrack information. On this foundation, new car inventories have not improved since December. By comparability, in 2019, new car stock averaged 3.66 million automobiles.

The time period “stock” accounts for what’s “in inventory” and what’s “in transit.” And it could embody models which were pre-sold. A supplier’s web site sometimes reveals three labels subsequent to the automobiles of their stock: “in inventory,” “in transit,” and “bought.”

The relentless new-vehicle value spike.

The common asking value (itemizing value) reveals that sellers are in no temper to supply offers but. The common itemizing value in June rose 11.5% from a yr in the past, to a document $ 45,976, in line with Cox Automotive.

Cox additionally mentioned that over the past week of June, asking costs “started to retreat barely.” So perhaps presumably, sellers are working into only a tad of value resistance in sure corners of the market.

Asking costs fell in January, February, and March, solely to do a U-Flip in April – and a part of this was seasonal as January and February are the worst months for sellers, when quantity tends to plunge from the December binge. By June, they hit a brand new document, up by 11.5% year-over-year. This nonetheless speaks of a scorching under-supplied market:

The common transaction value – the worth at which automobiles had been bought and delivered – jumped by 14% year-over-year, to a document $ 45,844 in June, in line with JD Energy information. In comparison with June 2019, this was up by 36% or by over $ 10,000.

At these costs, sellers made document gross earnings per car delivered. Together with finance and insurance coverage gross sales (F&I), sellers made on common $ 5,123 in gross revenue per car, up by $ 1,174 from the already excessive ranges of June 2021, in line with JD Energy estimates.

The chart reveals ATPs for December and June of every yr. Earlier than the pandemic, there was a longtime seasonality, the place the ATP hit a excessive in December however dropped from there to June yearly. However in June 2020, the ATP in June was degree with December for the primary time. And in 2021 and 2022, the ATP simply jumped from December to June with out regard to seasonality. The inexperienced line connects the Decembers:

Shortages of fuel-efficient automobiles. No shortages at Dodge & Ram sellers.

Loads of provide at Dodge and Ram sellers: Together with in inventory and in transit, Dodge sellers ended June with 90 days ‘provide, and Ram sellers with 81 days’ provide. The business considers 60 days about excellent between tight and enough.

Gasoline environment friendly automobiles primarily out of inventory. On the low finish of provide within the non-luxury segments had been the Asian manufacturers with fuel-efficient fashions that had been primarily out of inventory: Toyota Corolla, Kia Telluride, Toyota Camry, Hyundai Palisade, and Kia Sportage.

On the low finish of provide by section:

  • Hybrids, 17 days’ provide
  • Mid-size automobiles, 22 days’ provide
  • Compact automobiles: 24 days’ provide.

Provide of full-size pickups is rising: On the excessive finish of the 30 top-selling fashions had been three pickup vans and two SUVs: Ram 1500 (79 days), Ford Escape (69 days), adopted by Jeep Compass, Ford F-150, and Chevrolet Silverado.

That is now a brand new stock drawback: the flawed stock. By 2020 and 2021, pickup vans had been significantly exhausting to get, and everybody needed them. However then gasoline costs spiked, and abruptly the price of filling up grew to become one of many buy concerns, and pickup vans misplaced their edge. Demand swiveled to extra fuel-efficient automobiles.

However because of the lengthy and sophisticated provide chains, automakers can not immediately swivel with shifts in demand. And the provision points, triggered by the semiconductor scarcity, have taken on a brand new dimension by way of this shift in demand to extra fuel-efficient fashions that automakers weren’t ready for.

Used Autos: Loads of provide.

The stock at used-vehicle sellers, at 2.46 million automobiles on the finish of June, was up by 5.5% from a yr in the past. In comparison with 2019, it was down solely 10%.

However gross sales have been decrease for months, in comparison with 2021 and to 2019, as consumers have began to withstand the sky-high costs. And days’ provide on the finish of June, given the decrease charge of gross sales, edged as much as 49 days, only a tad above the common in 2019 (48 days).

Used automobiles: Loopy value spike runs out of gasoline.

Between December 2019 and December 2021, over these two years, the common asking value for used automobiles spiked by 42%, or by $ 8,300 per car, from $ 19,871 in December 2019 to $ 28,205 in December 2021, which was completely nuts, and that’s the place resistance. lastly began kicking in.

By June, the common asking value dipped to $ 28,012, just a bit beneath December. Declines in January, February, and March are seasonally regular, however declines in Might and June usually are not. And by the appears to be like of it, the utterly loopy value spike might lastly have run out of gasoline.

However there may be nonetheless no over-supply. The influx into the used car market from rental fleets has been tempered by manufacturing shortfalls of latest automobiles for rental fleets, they usually’re slower in turning over their fleets. And wholesale costs, although they’ve dipped from the spike by way of December, are nonetheless sky-high. On this atmosphere, sellers usually are not motivated but to chop costs by a complete bunch so as to transfer the iron. However at the least the worth spike has run out of gasoline.

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