Of course a year of surprises would end with even more. Sales for the full year came in at the lower end of our estimated range with an annual total of 14.9m. A glass-half-full view would say that’s a further recovery from last year’s level of 14.5m and still, a lot of metal moved. The glass half empty would look at the lost sales due to missing inventory and remain wistful for annual sales that likely would have surpassed 17m.
Where things get really surprising is that new inventory actually increased in December to a 5-month high, with the CarGurus New Vehicle Availability Index increasing by 17.9% in December. So how did sales slightly underperform while inventory increased? We’re likely starting to see a situation where the mix of inventory is becoming as important as just having a vehicle— both for vehicle body type and price (more on that in a bit). Not to be forgotten, the used index also increased 9.8%, and since used sales have seen a full recovery, we’re likely seeing more of a normal seasonal decline, which is driving the inventory increase we see in December. While monthly inventory gains are great, new inventory is still down 68.7% compared to last year, and used inventory is in a significantly better position with index levels down only 6.7% from last year.
One impressive trend in new and used vehicle demand for private mobility this year has been consumers’ willingness to pay historically high prices. Another mild surprise, though, was that the new average listing price declined slightly by 0.7% to $46,466 in December (but still up 25.6% from last year). Used vehicles didn’t see such pricing relief in December with prices accelerating a further 1.9% to $31,315, and now up 38.7% YoY.
Even with new inventory levels rising, the days-on-market for new remained effectively flat (down 0.3%), meaning that a mix of new vehicles was moving quickly while others remained on market for longer. Seasonality was likely the expected culprit for used days-on-market rising 3.5% from November, although both new and used days-on-market remain down year-over-year.
Given these findings, we’re taking a deeper look at our inventory data in the coming weeks to see what new trends could be emerging.
So, after a year of surprises can we expect more normalcy in 2022? Unfortunately, the turbulence in sales, inventory, pricing, and other factors is likely to continue in the new year, although the trajectory could flip. We’re likely to see new inventory levels increase in ’22 – however, the path will be one of starts and stops instead of linear. Prices, particularly used, will start to decline this year, but by how much and at what rate are uncertain. While used sales have rebounded, the story for new will be one of gradual recovery, the extent of which will be determined by vehicle production.
To learn more about vehicle inventory trends, download the CarGurus Vehicle Availability Index & Insights December 2021.