May 4, 2023 - Economy & Business
U.S. new vehicle inventories rising: Discounts could be next
New vehicle inventories are jumping from the pandemic-era's historic lows — and it could lead automakers to ease off the gas.
Driving the news: Inventories have nearly doubled from their trough of 64,770 in February 2022, according to the U.S. Bureau of Economic Analysis.
Between the lines: "Record-high new vehicle prices, rising interest rates and the impact of inflation on household budgets" have "caused auto buyers to pull back from the market," CFRA Research analyst Garrett Nelson writes.
- Plus, supply chain bottlenecks that throttled production earlier in the pandemic have eased.
Yes, but: Inventories remain far below pre-pandemic levels, which topped 1 million as recently as September 2017.
- Automakers have learned during the pandemic that less is more: They don't need to pile up as many vehicles to meet demand and keep profits flowing.
What's next: Dealers may begin discounting vehicles to reignite sales, Nelson predicts.
- "Moreover, we think production cuts could be announced in the coming months if new vehicle sales remain depressed," he writes.