The unrelenting inventory maelstrom continued to spin in September as persistent production delays coupled with resilient consumer demand further impacted vehicle availably across the board.
We saw yet another decline for the new Vehicle Availability Index in September, with a reading of 20.8, a decline of 10.9% compared to August and down 69.1% YoY. The continued reduction in new inventory is pulling down sales and causing a cutback in full year forecasts for both 2021 and 2022. One silver lining is the strong demand for consumers for new vehicles, evidenced by their willingness to pay historically high prices with reduced incentives and financing. However, this comes as a double-edged sword, as high demand might continue to keep new inventory levels low as production slowly comes back.
Declining new inventory continued to weigh on used inventory in September, with the Vehicle Availability Index coming in at 86.6, a decline of 2% from August and a decline of 4.5% YoY. With fewer new vehicles being sold, we’ve seen a drop in trade-ins as well as lease returns, which has caused an unseasonable decline in inventory this month. One part of used inventory that has seen a decline is Certified Pre-Owned (CPO), which saw inventory levels drop 5.9% in September and nearly 25% YoY. We’ve seen an increase in CPO demand with the limited new options making certified used vehicles appear more attractive – additionally, retailers may not be certifying vehicles at the same rate in order to get vehicles more quickly to waiting consumers.
With the continued reduction in vehicle availability, we saw further pricing increases – the average listing price for new vehicles has risen to $45,479, 3.3% more from August and 22.4% more YoY. Used vehicles also saw continued pricing growth, albeit at a slower rate, coming in at $29,330 an increase of 0.7% from August and up 28.3% YoY. While the slowing growth rate for used is welcome, a plateau at historic highs still means that prices are historically high.
With new inventory this low, it’s not surprising to hear that the average days-on-market for new continues to head lower, with the average days coming in at 59 days, a decline of 32.1% YoY. Seasonal declines in used demand are likely behind the recent increase in used days-on-market, which came in at just under 62 days, an increase of 2.6% from August.
As we enter the last quarter of 2021, the question that’s top of mind is what 2022 will hold for the industry. With sales forecasts already being cut in anticipation of a dearth of inventory, we’ll likely endure another transitory year before a hopeful return to a new normal in 2023.
To learn more about vehicle inventory trends, download the CarGurus Vehicle Availability Index & Insights September 2021.