New Car Inventories Hit Two-Year High

Despite grappling with the ongoing UAW strike, many franchise dealers representing the Detroit Three automakers (General Motors, Ford, Stellantis) have witnessed a notable upswing in new-car inventory, attaining the highest levels since spring 2021, according to recent industry analyses from Cox Automotive and other experts.

In October, new-car inventories skyrocketed, hitting a fresh two-year high even amid labor strife. Although the UAW strike has unmistakably impacted automakers and dealers, inventory levels have demonstrated resilience and relative stability, particularly for the Detroit Three.

GM navigated into October with a 60-day vehicle supply, yet confronted vulnerabilities with limited stocks of profit-powerhouse models from Chevrolet and Cadillac. Meanwhile, Ford commenced September with a robust 90-day supply, and Stellantis outpaced with 111.

Charlie Chesbrough, a senior economist at Cox Automotive, conveys optimism yet urges vigilance: “While inventory levels are maintaining stability – with many Detroit automakers boasting sufficient inventory to sustain operations in the upcoming month – certain brands are experiencing an inventory accumulation. Although production disruptions may permeate the distribution network gradually, the ongoing strike holds potential to induce impactful ramifications in the ensuing weeks if it persists.”

The total U.S. supply of unsold new vehicles surged in October to 2.21 million units – this apex, the loftiest since early spring 2021, marked a 60% increase from the same period in the preceding year. Despite this spike, inventories remained 35% below pre-pandemic levels in 2019. The inventory data encompasses vehicles both available at dealer locations and those en route.

October commenced with a 60-day industrywide supply. Cox notes the industry has witnessed a gradual gravitation toward this 60-day supply level. Although that was once the norm, the last time the industry reported such figures was in March 2021.

The automakers’ unforeseen resilience and boost in new-car inventory amid labor and production challenges may again shift the retail environment for dealers and consumers alike in the concluding months of 2023.

Here is a breakdown of the Detroit Three’s supplies and challenges and how they may impact dealers, according to Cox:

General Motors

GM concludes its third quarter showcasing a double-edged scenario: boasting its largest inventory of new vehicles on dealer lots since 2020 while also grappling with particularly tight supplies for its Chevrolet and Cadillac brands.

Though GM is holding a substantial vehicle inventory, Chevrolet and Cadillac emerge as the most susceptible to a prolonged strike among Detroit automakers, presenting limited stock for these brands – 57 and 46 days’ supply, respectively – both figures languishing below the industry average.

Noteworthy is the dwindling availability of Chevrolet’s and Cadillac’s most sought-after and profit-generating models, including the Tahoe, Suburban and Escalade, which are all navigating through an inventory crunch with under 30 days’ supply.

Stellantis

Stellantis appears to be better shielded from the strike’s ramifications. Consistently maintaining the heftiest inventory among Detroit automakers and brands at large, it demonstrates a formidable resistance to the ongoing labor disputes. Remarkably, four of Stellantis’ volume brands – Dodge, Chrysler, Ram and Jeep – boast days’ supplies in the triple digits, even amid the ongoing labor unrest. Specifically, Dodge and Chrysler lead the pack with 142 and 127 days’ supply, respectively.

Ford

Ford presents a varied inventory landscape across its models and makes. The Lincoln brand claims an industry-leading 124 days’ supply among luxury brands, while the iconic F-150 possesses a hearty 97 days’ supply as of October. By contrast, a few models such as the Bronco and Ranger, especially those emerging from strike-impacted Chicago and Michigan plants, reveal pinched supplies, dwindling to 45 and 33 days, respectively.

However, it’s crucial to highlight that aside from these nuanced shortages, Ford ensures a generous supply of various other models, including the Escape and Bronco Sport, with some even basking in a days' supply in the triple digits.

What This Means for Dealers

In summary, dealer supply in the wake of the UAW strike depends on what manufacturer they represent. Chevrolet and Cadillac dealers may want to brace for some of the tightest inventory straits.
On the flip side, Stellantis dealers should not experience significant inventory downturns.

Finally, Ford dealers will find they have a mixed bag of supply scenarios across their portfolio.

The unfolding UAW developments will bring new challenges for dealers in the closing months of 2023.