New, Used Prices Retreat

The average listing price for new vehicles rose throughout June but began to retreat by the end of the month while inventory held relatively steady, according to new Cox Automotive analysis of vAuto Available Inventory data.

In contrast to the new-vehicle market, the used-vehicle market is looking more normal with reasonably strong sales, decent inventory, and prices that are high but have begun to inch down, according to the same data.

New-Vehicle Inventory Holds Steady as Asking Prices Retreat at Month’s End

The total U.S. supply of available unsold new vehicles stood at 1.12 million units at the end of June, just off from the revised end-of-May available supply of 1.13 million. Inventory has hovered in that range since the start of the year, though supply is far below 2020 and 2019 levels.

Available supply at the end of June was down 6% from the same period in 2021. In raw numbers, that amounts to about 75,000 vehicles less than a year ago. The percentage difference and the raw volume difference in supply between this year and last is narrowing, but only because it was at this time a year ago that the chip shortage began severely hitting production, inventory, and sales.

Charlie Chesbrough, Cox Automotive senior economist, warned not to see the comparisons from this year to last as a sign that the supply situation has improved because it has not. “Production and inventory are stuck in low gear, far below historical levels, with no end in sight,” he said.

AutoForecast Solutions recently increased its estimate of vehicle output cut from automakers’ 2022 plans to 3.3 million vehicles. For comparison, in the same period in 2020, inventory stood at 2.65 million vehicles for a 70 days’ supply. For 2019, the difference is more dramatic, with inventory of 3.73 million for a days’ supply of 86.

At the end of June, the days’ supply of unsold new vehicles was 38, up from the revised 35 days’ supply at the end of May. That is the same general range days’ supply has been in since mid-January. Days’ supply at the end of June was 39% above the end of June a year ago when the chip shortage began to take its toll.

Non-luxury inventory totaled 936,867 units entering July for a 37 days’ supply. That compares with 845,738 units entering June for a 34 days’ supply. Luxury supply stood at 179,981 units for a 43 days’ supply at the start of July compared with 138,550 units for a 38 days’ supply.

The average listing price climbed throughout June but by the last week of the month began to retreat slightly. The average listing price was $45,976 at the end of June, still above the revised $45,504 at the end of May. The asking price began dropping in mid-February but started edging higher in April and continued through June until the final days of the month. The listing price still is running 11% above June 2021, when it was $41,589.

However, prices are expected to remain elevated due to continued high demand, low inventory, and record low incentives. In addition, luxury vehicles are accounting for a larger – record – percentage of share of new vehicle sales at 18%. Automakers still are prioritizing available computer chips to high-end, high-margin models instead of entry-level vehicles.

Used-Vehicle Market Looking More Normal as Prices Inch Down

The total supply of unsold used vehicles on dealer lots, both franchised dealers and independents, across the U.S. stood at 2.46 million units. That compared with Cox Automotive’s revised number of 2.47 million at the end of May. Inventory at the end of June was 5% above year-ago levels. 

Total days’ supply at the end of June stood at 49, compared with the upwardly revised 48 at the end of May. Days’ supply in June was 27% above year-ago levels. The Cox Automotive days’ supply is based on the daily sales rate for the most recent 30-day period, in this case, ended June 27.

By price category, the lower the price, the lower the supply, though even supply in those categories has improved. The under $10,000 segment has the lowest available supply and lowest days’ supply of 33, but that is up from 25 a month earlier. The $15,000 to $25,000 segments had days’ supply in the 40s. Price categories between $25,000 and $35,000, one of the largest for available inventory, had in the 50s for days’ supply. The above $35,000 category had a 62 days’ supply.

The average used-vehicle listing price as June closed dipped to $28,012, compared with a revised $28,312 at the end of May. Price growth versus the year earlier was 28% in mid-April but has been falling every week since then and now stands at 12% higher than a year ago. Cox Automotive predicts further declines should continue over the summer.

“We continue to experience elevated prices in the used-vehicle market, and this looks to be the norm for some time,” said Chris Frey, senior Industry Insights manager, Cox Automotive. “But the year-over-year gains are set to come down, maybe even turning negative from time to time.”

In terms of wholesale prices, the Manheim Used Vehicle Value Index shows prices didn’t move as high as expected and the trend lines are in keeping with historical patterns, Frey noted. “This year’s softer sales in the first half of the year started these depreciation trends a little lower than usual, but they are not out of line with what we’ve seen from 2014 to 2019,” he said. “After such a lofty run-up last year, some normalcy is a welcome change.”

Cox Automotive has reduced its forecast for used-vehicle sales for 2022 to 37.1 million based on economic conditions and the inventory constraints of the new-vehicle market that is holding back sales.