New vehicle sales velocity continues to decline, with the average days-to-move hitting 80 days in January 2025, the highest in five years, according to Cloud Theory’s latest On the Horizon report. Meanwhile, the vehicle turn rate remained flat at 35% for the fourth consecutive month, reflecting sales challenges that are approaching pre-pandemic lows.
The report shows that new vehicle inventory dropped to 2.96 million units in January 2025, down from 3.23 million units in December 2024. However, year-over-year inventory levels increased from 2.54 million units in January 2024. Despite a seasonal dip in average marketed prices to $49,500, new vehicle prices have remained near or above $50,000 for over a year.
"While some of this month's trends can be attributed to normal seasonal patterns, there is a longer-term and underlying dynamic that is pointing to a more challenging sales environment," said Rick Wainschel, vice president of data science and analytics for Cloud Theory. "The effects of ongoing price premiums and longer sales periods should be on every manufacturer's radar screen. And, if the tariff situation moves from threats to reality, these marketplace issues may shift from worrisome to problematic."
In response to slowing sales and rising inventory, dealerships are increasing incentives. The report highlights that average marketed discounts on dealer websites rose by 33% year-over-year, reaching $1,953 in January 2025.
Lexus, Toyota Maintain Inventory Efficiency Advantage
Cloud Theory’s Inventory Efficiency Index, which measures supply and demand dynamics, revealed that Lexus and Toyota remain market leaders in inventory efficiency. Lexus leads with a score of 377.6, followed by Toyota at 256.3. However, both brands have seen significant inventory declines -- Toyota's stock fell by 13% compared to January 2024, while Lexus experienced a steep 63% drop.
"With pricing currently being such a key issue in the automotive marketplace, it is important to note that makes with higher Inventory Efficiency Index scores have an advantage in being able to promote and command premium values," said Matt Sharp, chief digital officer and general manager of Cloud Theory. "Whether it is due to supply shortages or inherently strong brand power -- or both -- those makes are better able to weather the storm if prices remain elevated."
The Inventory Efficiency Index assesses an automaker’s supply-demand balance, with a score of 100 indicating equilibrium. Brands scoring above 100 are moving inventory more efficiently than competitors, while those scoring below 100 face supply-demand misalignment.
As manufacturers navigate pricing pressures, extended sales periods, and the potential impact of tariffs, the industry’s ability to balance inventory and demand will be key to sustaining profitability in the months ahead.
