Market First Report for August 2022: New Vehicle Inventory May Be Increasing. Later, what?

Information suggests that by the end of August, new car stock will have increased by 2.87%, and used vehicle stock may have decreased by 3.48%. New vehicle prices climbed by 0.10% to $48,429, while used vehicle prices jumped by 0.53% to $34,242.


The Federal Reserve reports that in July, auto output in the United States reached a level not seen since before the 2009 recession. Not all manufacturers are enthusiastic about their 2022 performance, despite predictions that the chip shortage will ease by year’s end. BMW has warned it may miss profitability forecasts after lowering its production outlook for the second half of the year, citing unstable semiconductor and European energy supplies. Mercedes-Benz, however, has reported supply shortages but increased car sales projections for 2022.


Here’s What You Must Know


By the end of the month, New Vehicle Inventory is predicted to increase to 1,068,688, representing a considerable change from July’s inventory drop. It is anticipated that the price of used automobiles will decrease as there are more models to choose from in the market.


Here are your major takeaways:


Maintain your used-car marketing: In August, the average price of a used car was $34,242. Get rid of as many secondhand vehicles as you can while demand is high.


Keep a close eye on price trends: new car stock may rise by as much as 3 percent by the end of the month. In the future months, falling used car prices will be caused by an increase in available new vehicles; therefore, you’ll need to adapt your pricing plan accordingly.


Keep collecting EVs: More people are signing up to own electric vehicles, but there are fewer available for purchase. In anticipation of rising demand, it is wise to stock up on electric and hybrid vehicles.


Retail Look for New Vehicles


 The number of brand-new cars on the market at the beginning of August was only 0.03% fewer than it had been at the beginning of July. As we predicted at the beginning of the year, the supply of cars has remained at a consistently high level. Expects new car inventory to rise to 1,068,688 by the end of this month, which is a huge increase over recent months.


The amount of inventory rebuilding that will be necessary is a factor that will be affected by the shift from “supply limited” to “demand driven,” as stated in the August production projection update. A surplus of available vehicles and falling prices could emerge from a further increase in new inventories this fall.


The average price of a new car in August was $48,429, marking the sixth straight month of increases. While this is a slight increase over last month, it is still only 0.10% above MSRP. To maintain sales growth in the future months, dealers should anticipate possible demand drops and set prices accordingly.


Retail Outlook for Used Vehicles

 Used vehicle stock started the month up 0.94 percent from early July. A modest drop from last month’s total of 1,628,662 used cars on the road is expected by the end of August. Since there is still a greater supply of used vehicles than new ones, car dealers should keep buying and selling as many vehicles as they can.

With an increase of 0.53% from July, the average price of a used car is now $34,242. Dealers should keep advertising used vehicles at this month’s still-high prices, but they should keep an eye out for price drops in the months ahead as new vehicle production increases.


Retail Outlook for Electric Vehicles


Completely electric vehicle stock fell by 4.01 percent in August, a far smaller drop than the 9.46 percent drop seen in July, while hybrid car stock rose by 2.94 percent. Because of ongoing supply restrictions and rising customer demand, the available stock of electric vehicles has been falling for three months in a row. Reports that compared to the period prior to the epidemic in January 2019, EV registrations in the 15 states with the highest EV demand have surged by more than 87%.


Several facets of the automotive sector were altered when President signed the Inflation Reduction Act in August. Used electric vehicle purchasers can now receive tax credits of up to $4,000. However, with so much manufacturing depending on China, automakers may find it difficult to qualify for EV subsidies due to the ever-increasing complexity of the standards. Dealers should keep buying and selling as many EVs as they can to meet the expected demand.


Frequently asked questions


Is the new car shortage ending soon?


The problems that are producing the scarcity won’t be resolved anytime soon. According to current estimates, it will be at least two to three years before things are back to “normal.” possibly more time. There are few, if any, new cars available for test drives due to the “new normal” in which businesses sell out of their stock orders months before they even arrive.


Why is there no new car inventory?


The new and used car markets are being distorted, and inflation is beginning to rise as a result of low inventory. Over the past year, purchasing a car has been a crazy adventure. The quantity of new cars on the market has been significantly reduced due to a shortage of semiconductors for vehicles that has existed since last year and ongoing supply chain problems.


How long will there be a shortage of new cars?


Since many of the components come from a single source, production problems at one supplier might affect several automakers. Due to these continued difficulties, the output won’t likely resume at its previous level until 2023, and stockpile levels might not increase until the second half of 2023.

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