Topic: used cars
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.
In the July 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, which he’ll dive into in-depth at Navigate.
The narrative divergence between new and used continued in July as new inventory levels continued to tumble while used levels continued to rebound.
New inventory levels plunged further as the new Vehicle Availability Index reading for July came in at 26.9, a drop of 13.5% from June and down almost 60% from last year. There is hope that July could be the low point as production is forecasted to accelerate in August, which is welcome news. If new inventory continues to fall further, it’ll likely start to impact sales more dramatically.
June featured a continuation of the trends we witnessed in May, which, depending on the viewpoint, that means we’ve yet to reach the peak or the bottom for the ongoing inventory shortage. Thankfully, there is an expectation that as we enter the third quarter, we could start to see the highly anticipated inflection point that would start us on a path to normalcy; yet, that path will likely be long and filled with further surprises.
As vehicle availability continues to challenge both dealers and shoppers, CarGurus is happy to introduce a new monthly report from our Director of Industry Insights & Analytics, Kevin Roberts. The Vehicle Availability Index & Insights report will deliver his in-depth research and outlook for coming months.
The US auto industry continues to be buffeted by COVID-19, though not as directly as we witnessed last year. The lack of available semi-conductors is creating major hurdles for OEMs, suppliers, and dealers as Q2 production plans have been further impacted.
New inventory levels remain impacted not only by limited production, but also by a historically high level of consumer demand for new vehicles. This surge in private mobility appetite has increased sales, and coupled with production constraints, further reduced inventory availability. The CarGurus Vehicle Availability Index dropped to 36.8 for new vehicles, a decline of 51.9% compared to last year. However, we witnessed a promising sign with used inventory holding steady at 88.2, a slight increase of 4.3% year-over-year.
With vaccine rollout happening across the country and Covid restrictions easing in many states, car shoppers have continued to search for and research vehicles online through it all. To see which cars sat at the top of shoppers’ wish lists, we dug into our search data from the first quarter. In particular, we looked at which makes and models were the most searched on CarGurus in each US state.
As dealerships were forced to shut down their showrooms, auction lanes closed, jobless claims peaked, and car sales fell off a cliff in April, the industry was laser-focused on consumer demand. Fortunately, May brought incentives, stimulus checks, and pent-up demand, which drove consumers back to dealership lots. However, because inventory has not been replenished, the industry’s problem has shifted from demand to supply.