October saw a significant 2.9% increase in new vehicle inventory, bringing the total to 3.14 million units on dealer lots. This marks the second consecutive month of a 90,000-unit increase, suggesting potential shifts in the automotive market's supply-demand dynamics, according to ZeroSum's November "State of the Dealer" report.
The expanded inventory has already impacted vehicle pricing. The average price for new vehicles saw a reduction of more than $300 in October, continuing a trend of eight consecutive months of growing incentives and discounts below the manufacturer's suggested retail price (MSRP).
Certified used vehicle prices also declined, dropping from an average of $39,351 in August to $38,166 in October -- an overall decrease of more than $1,000.
"Over the course of the long inventory recovery period, vehicle counts have remained lower than they were prior to the pandemic," said Jeff Englishmen, vice president of dealer success at ZeroSum. "While we are still not back to an oversupply situation, the recent acceleration of growth points to the potential of that reoccurrence. We aren't seeing significant shifts in sales velocity yet, but dealers should be aware of these big picture market dynamics when pricing and supporting their inventory positions."
ZeroSum's report also predicts a drop in used vehicle sales volume for November. Used vehicle sales are expected to fall from 1.27 million units in October to 1.21 million, while certified used sales may decline from 168,000 units to 161,000 units.
“The used vehicle market has been very steady over the past year, both in terms of supply and demand,” Englishmen noted. “However, we are starting to see some initial signs that the sales velocity trends are weakening slightly, which definitely bear watching going forward.”
Other key insights from the report:
• New vehicle turn rates held steady, moving slightly from 36% in September to 37% in October.
• Days-to-move for new vehicles inched up from 69 days to 70 days.
• Used vehicle turn rates increased from 64% to 65% from September to October.
• Days-to-move for used vehicles rose modestly, from 43 days in September to 44 in October.
