Economic Update: 8.16.24

Stabilizing Inventory Amid Reporting Challenges

Despite the turbulence caused by the June cyber breach at a key dealer management system (DMS) supplier, new vehicle inventory has shown signs of stabilization. As of August 1, the total inventory stood at 2.79 million units, representing a 3.6% month-over-month decline. However, this stability comes with a caveat as days’ supply data has been inconsistent, showing a sharp 43% drop to 68 days. This volatility is expected to level out throughout August as data normalizes.

New Models and Rising Incentives

The arrival of 2025 model-year vehicles has shifted inventory dynamics on dealer lots. Brands like MINI, Honda, and Genesis are leading the charge, with 40% or more of their current inventory of the latest models. Meanwhile, brands like Dodge and Chrysler are grappling with high days’ supply, holding onto significant portions of older models and impacting their inventory turnover.

Pricing Trends: A Mixed Bag

The average listing price for new vehicles remains high at $47,307, slightly down from last year. However, not all brands are equally affected. Honda, Mazda, and Buick offer more competitively priced options that appeal to cost-conscious consumers. As incentives increase, dealers may find opportunities to move older inventory, particularly as used-car supply tightens.

Strategic Adjustments for Dealers

The current market conditions suggest dealers need to be strategic in pricing and inventory management. With new vehicles becoming more available and used-car prices starting to soften, focusing on inventory turnover and exploring value-added services will be vital in maintaining profitability. Keeping an eye on economic indicators and adjusting strategies will help navigate the ongoing market uncertainties.