New-Vehicle Inventory Remains Stuck in Neutral in April

Revised, June 16, 2022 – New-vehicle inventory barely budged in April due to continued supply chain disruptions, according to a Cox Automotive analysis of vAuto Available Inventory data. Inventory of imports and small, fuel-efficient models were among the lowest due to strong demand driven in part by rising gas prices. Prices in April rose as well, with the average new vehicle listing price climbing again above $45,000.

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The total U.S. supply of available unsold new vehicles stood at 1.13 million units at the at the end of April. That compared with the revised March available supply of 1.10 million vehicles. Inventory has hovered around that range for months.

Available supply at the end of April was down 40% from the same period in 2021. In raw numbers, the supply of 1.13 million unsold new vehicles as May opened was about 800,000 vehicles less than the supply a year ago, when the global chip shortage became evident, and 2.2 million less than in 2020.

“The chip shortage started disrupting vehicle production a year ago at this time. The percentage differences for inventory and days’ supply will look less dramatic going forward from here, but that does not mean the situation has vastly improved,” said Charlie Chesbrough, Cox Automotive senior economist. “New vehicle inventory remains stuck in that 1 million to 1.1 million range, far below historical norms.”

The days’ supply of unsold new vehicles was 36 at the start of May, up from the revised 34 days’ supply at the start of April and roughly in the same general range the market has held since mid-January. Days’ supply at the start of May was 40% lower than the beginning of May a year ago.

Non-luxury inventory totaled 955,293 units entering May for a 35 days’ supply, roughly the same as in April. Luxury supply stood at 168,872 units, up from 156,104 a month earlier, units for a 38 days’ supply.

The Cox Automotive days’ supply is based on the daily sales rate for the most recent 30-day period, in this case, the period ending May 2. In April, new vehicle sales dropped 19% from year-earlier levels and were down 2% from March. That put the seasonally adjusted annual sales rate (SAAR) at 14.3 million, an improvement from 13.4 million in March but well off from 18.3 million of a year ago.

Sales do not represent demand, which is strong. The lack of inventory is holding back sales as the industry contends with multiple disruptions to the supply chain. In China, the surge in COVID-19 cases has triggered lockdowns and factory closures. The chip shortage continues along with shortages of other parts. The war in Ukraine, a primary source of wiring for European automakers, has disrupted production as well, particularly of German vehicles.

Prices started to climb again

The average listing price – or the asking price – started climbing again in April, closing the month at $45,137, an increase from the revised end-of-March price of $44,436.

Listing prices began falling in the early weeks of 2022, but turned higher in the last two weeks of March and throughout April. List prices are now running 12% above year-ago levels.

According to Cox Automotive data, the average luxury vehicles edged higher to $65,179 at the end of April, compared with $64,278 at the end of March. The non-luxury average list price was up to $41,758 at the end of April, versus $41,246 at the end of March.

The average transaction price – the price buyers paid – also began rising again in April to $46,526, according to data from Kelley Blue Book, after reaching a record in December 2021. Average transaction prices rose 0.7% in April, an increase of $304 from March. The average transaction price is up 13% or $5,354 from April 2021.

“As long as inventory remains constrained, we expect prices to stay high as evidenced by climbing asking and transaction prices in April,” said Chesbrough. “The price growth rates may look improved in the coming weeks because they will be compared to a year ago when prices skyrocketed due to the start of the chip shortage.”

Import brands, fuel-efficient models have low inventory

In terms of vehicle segments, hybrids as well as small, fuel-efficient cars and SUVs had among the lowest inventories due to high demand caused by rising gas prices and disrupted production of those models, according to Cox Automotive analysis of vAuto Available Inventory data.

The Kelley Blue Book Brand Watch reports for the first quarter, during which gas prices first spiked, showed fuel efficiency became more important to consumers than it had been in the past five years. Shopping for cars versus SUVs and trucks rose to its highest level in years. Of non-luxury shoppers in the first quarter, 37% considered a car, well ahead of the 31% in the previous quarter. Luxury car shopping also edged higher. One in four consumers shopped for an electrified vehicle – either a hybrid or EV.

Among segments, compact car had the lowest inventory, after low-volume high-performance cars. Also with low inventories were hybrids, small SUVs and midsize cars. Large, luxury SUVs also had low inventory, as demand for high-end vehicles remains very healthy. Of the segments with the highest inventories, most were luxury and larger cars. Full-size trucks also had higher inventories.

Brands with below-average inventories were imports, including those that make hybrids and smaller cars. Among non-luxury brands, Kia, Honda, Toyota and Subaru had the lowest inventories. Luxury brands with low supply included Porsche, Land Rover and Lexus.

Brands with higher inventory were mostly domestic makes with Stellantis’ brands – Dodge, Ram, Chrysler and Jeep – at the high end. Audi, Volvo, Lincoln, and Buick also had higher-than-average supply.

Of the 30 highest-selling models in the U.S., those with the lowest inventory were mostly imports, particularly Toyota and Honda brand models. At the bottom were Honda CR-V, Subaru Crosstrek, Honda Accord, Kia Sportage and Toyota Corolla.

Of the 30 top-selling models, the highest inventory was mostly of domestic full-size pickup trucks and SUVs, including Ram 1500, Chevrolet Silverado and Silverado HD, and Ford Escape and Explorer.

In terms of price categories, under $20,000 had scant inventory of less than 6,000 units available and days’ supply of 34. The $20,000-to-$40,000 category had days’ supply ranging from 28 to 30. Specifically, the $30,000-to-$40,000 category had the highest supply in sheer volume. The $40,000-to-$50,000 category was the next highest in supply with a 38 days’ supply, and the $50,000-to-$80,000 categories had days’ supply ranging from 42 to 45.

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More insights are available from Cox Automotive on new-vehicle inventory, using a 30-day rolling sales methodology to calculate days’ supply.

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Michelle Krebs is executive analyst at Cox Automotive.