New-vehicle supply fell in September to new lows – fewer than a million vehicles were available for sale, according to a Cox Automotive analysis of vAuto Available Inventory data, while new-vehicle prices hit another all-time high last month, marking the sixth straight record-setting month and surpassing $45,000 for the first time, according to a new report from Kelley Blue Book. The findings were summarized in separate news releases Sept. 13 and 14.

September 2021 Vehicle Inventory Chart, by brand. - Graphic: Cox Automotive

September 2021 Vehicle Inventory Chart, by brand.

Graphic: Cox Automotive

Inventory Squeeze

The total U.S. supply of available unsold new vehicles stood at 915,089 vehicles as September drew to a close. That was down from 1.01 million vehicles a month earlier. Inventory nearing the end of September was 63% below a year ago, according to a Cox Automotive analysis. In raw numbers, the under 1-million vehicle supply compares with nearly 2.5 million in 2020 and 3.5 million in 2019.

The days’ supply of unsold new vehicles was 30 as October opened. The days’ supply has hovered in the range of 29 to 31 since mid-July. Still, the days’ supply in September was 47% below the same timeframe in 2020.

The Cox Automotive days’ supply is based on the daily sales rate for the most recent 30-day period. New-vehicle sales have been losing momentum since June. The September sales pace, or seasonally adjusted annual rate (SAAR), dropped to 12.1 million, compared with more than 16 million and 17 million in 2020 and 2019, respectively. The sales pace has been slowing since June.

Toyota, Honda Had Lowest Supply

Toyota and Honda, both of which made drastic production cuts, had the lowest inventory, each with 17 days of supply. Lexus had the lowest supply among luxury brands at 19 days. Most of Toyota’s volume models, like RAV4, Camry, Corolla, Highlander, Prius and Tacoma, had days’ supply under 20. Lexus’ volume model, the RX sport utility, had a scant 10 days’ supply.

Despite the lowest inventories, Toyota still outsold General Motors for the second consecutive quarter. Some analysts forecast Toyota will outsell GM for the year and possibly in 2022.

Similarly, Honda had only 17 days’ supply. Its volume models that make up the bulk of the brand’s sales – Accord, Civic and CR-V – had days’ supply in the teens. The best-selling CR-V utility had less than 10 days’ supply.

Perhaps, for Toyota and Lexus, the worst is behind it. The automaker plans to resume full production and make up as much as a third of the lost production. Toyota had cut its production target through the rest of its fiscal year, which ends March 31, 2022, by 300,000 vehicles to 9 million units globally. It plans an additional 97,000 vehicles between December and the end of March by scheduling weekend shifts. COVID-19 infection rates in southeast Asia, where the supply bottlenecks occurred, are declining and concerns about production risks are easing.

Kia had only a 20 days’ supply with the new Carnival minivan and popular Telluride SUV having days’ supply in the teens. Subaru had a 22 days’ supply with its best-selling Forester and Outback each having only a 14 days’ supply.

GMC and Chevrolet brands were at the low end of the inventory spectrum with a days’ supply of 25 and 26, respectively. Perhaps the worst is behind GM as well. The automaker confirmed production restart dates for several plants that make various models in North America after months of downtime. That would mean almost all of its plants would be up and running at full production in November.

Average Vehicle Transaction Prices, through September 2021. - Graphic: Cox Automotive

Average Vehicle Transaction Prices, through September 2021.

Graphic: Cox Automotive

High Vehicle Prices

At $45,031, the average transaction price (ATP) for a new vehicle was up 12.1% (or $4,872) from one year ago in September 2020 and up 3.7% (or $1,613) from August 2021.

The all-time-high prices accompanied the fifth straight month of a slowing sales pace. Total sales last month numbered just 1,012,797, a 7.3% month-over-month decrease and one of the lowest volumes in the past decade. On top of supply dynamics, the vehicle mix shifted in September away from lower-priced sedans, compacts and entry-level segments toward more-expensive pickups, SUVs and the luxury market.

“The record-high prices in September are mostly a result of the mix of vehicles sold,” said Kayla Reynolds, analyst for Cox Automotive. “Midsize SUV sales jumped in September compared to August and full-size pickup share moved up as well. Sales of lower-priced compact and midsize cars, which had been commanding more share during the summer, faded in September. As long as new-vehicle inventory remains tight, we believe prices will remain elevated.”

Incentive spending fell in September to another record low, dropping to 5.2% of ATP last month, a decrease from 5.6% in August 2021 and well below the 10.0% of ATP recorded in September 2020. Porsche, Land Rover, Genesis, Subaru and Toyota had among the lowest incentive spend last month, all 3% of ATP or lower. On the other hand, Alfa Romeo, Buick, Fiat and Infiniti each had incentive levels above 10% of ATP.

ATPs in September continued to be driven higher by strong luxury vehicle sales. Luxury sales accounted for 16.6% of total market sales, up from 15.1% in September 2020. Luxury share in September was among the highest in the past decade, and luxury buyers paid an average of $60,845 for a new vehicle last month.

Further, many luxury brands, notably Acura, Cadillac, Genesis and Mercedes-Benz, achieved year-over-year ATP gains in excess of 20%. Cadillac, for example, saw ATPs jump up more than 32% last month, reaching $81,939. Consumers continue to pay near $100,000 for a new Cadillac Escalade. More than 3,500 were sold in September 2021, a jump of more than 50% from August 2021.

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