U.S. Light-Vehicle Inventory Solid for Now After Sales Surge

U.S. light-vehicle inventory held steady at the end of June, finishing the month at 3.22 million units, relatively close to May’s 3.21 million but up 15.0% from year-ago.

The level is high enough for the industry to easily support another strong sales month following June’s spike to a 67-month peak in the seasonally adjusted annual rate to 15.9 million units.

However, because demand is expected to improve significantly in the year’s second half, strong production levels are on tap for the remainder of the year to keep inventory fortified.

June 30’s LV days’ supply was 60, slightly above the prior month’s 58 and like-2012’s 59. If July continues typical trends, days’ supply will fall into the mid-50s and volume will decline as much as 10% from June, largely because July normally is a slow production month.

Inventory of North American-built LVs ended June at 2.58 million units, relatively flat with May and 13.7% above year-ago. Days’ supply was 61, same as like-2012 and slightly higher than May’s 59.

Due in part to strong sales in June, inventory of domestically made vehicles is somewhat low compared with historical standards, especially considering second-half sales are forecast to greatly improve on the 15.3 million SAAR of the first six months.

Thus, there have been cancelations and reductions in the normally scheduled summer vacation shutdowns at several Chrysler, Ford and General Motors facilities. GM, the North American production leader, is shortening or canceling downtime at eight assembly plants, and Ford and Chrysler have done the same at seven plants each.

Inventory of imported LVs ended June at 640,096 units, up 20.6% from year-ago and 1.9% above May. Days’ supply was 56, compared with 54 in May and 53 year-ago. Unlike domestic-model inventory, imported-vehicle days’ supply is somewhat high, another indication a strong second half is expected.

By vehicle type, cars ended June at 1.52 million units, just below May levels but 28.0% above year-ago. Light trucks ended June at 1.69 million, up 1% from May and just 5.4% more than year-ago. Days’ supply was 58 for cars, 62 for trucks.

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