In the August edition of the CarGurus Vehicle Availability Index & Insights Report, Director of Industry Insights & Analytics Kevin Roberts provides a glimpse at the latest trends impacting inventory and pricing, which he’ll dive into in-depth at Navigate.
August had been pegged as a potential turning point for the ongoing inventory shortage – however, as has been quite common on this journey, the expectation was accurate but not in the ways that were anticipated.
For what feels like the umpteenth time, new inventory levels dropped further with the new Vehicle Availability Index reading for August coming in at 23.3, a drop of 13.4% from July and down over 64% from last year. There was hope that August could become an inflection point – however, we continued to see further plant shutdowns due to a lack of silicon, and now the prospects for new sales for the rest of the year continue to dim with the reality that tight inventory will last well into 2022.
In yet another unexpected turn, used inventory reversed recent gains and declined in August with the used Vehicle Availability Index coming in at 88.3, a decrease of 4.3% from July. What’s causing this shift? The lack of new inventory. Declining new inventory has been pulling down new sales, which is impacting both trade-ins and lease returns, which pulled down franchise inventory levels 7.2% from July. With new inventory likely to weigh down new sales through the rest of the year, we could see a continued impact on used inventory as well.
Another factor impacting lease returns has been historically high prices which continued in August. The average listing price for a used vehicle came in at $29,129, up 1% from July, and provided continued opportunities for arbitrage for consumers who have their leases expiring. Prices for new vehicles accelerated even faster than used in August, increasing to $44,288 and up 2.5% from July. Consumers are aware of high prices, as well – a recent survey from CarGurus’ sister company Autolist highlighted that only 30% of used vehicle shoppers agreed that it was a good time to get a vehicle.
As we start September, the outlook for the rest of 2021 has chilled slightly. The potential for a historic sales volume year built on strong consumer demand will not materialize due to inventory, yet it will still be a profitable year for OEMs and dealers as rising prices have offset lost sales.
To learn more about vehicle inventory trends, download the CarGurus Vehicle Availability Index & Insights August 2021.