Sky-High U.S. Demand in August Pares Inventory for September

August’s U.S. sales surge, which led to a 10-year high 17.7 million-unit seasonally adjusted annual rate, reduced light-vehicle inventory from the previous month’s level when initially it was expected to remain flat.

Inventory declined 1.4% from July to 3.302 million units and days’ supply dropped to 55 from 58. Inventory declined from July to August in each of the past two years because the Labor Day weekend was included in August’s results, thereby lifting sales volume for the period and eliminating more stock from dealer lots. That was not the case this year as the period ended on the final day of the month and stock levels were expected to remain even with July.

However, with August sales ending roughly 45,000 units higher than forecasted, inventory declined by a similar amount.

The thrust of the month-to-month decline was in all car-segment groups, as well as pickups and SUVs.

In total, car inventory fell 2.6% from July to 1.443 million units, which was a smidgeon below like-2014. Days’ supply slipped to 56 from July’s 59, but was well above year-ago’s 52.

Trucks also declined from July, but by a slight 0.5% to 1.860 million units, and still 6.3% above year-ago. August’s truck days’ supply dropped to 54 from 57 in both July and like-2014.

Bucking the trend was CUV inventory, which increased 1.6% from the prior month in spite of a 17% year-over-year sales increase in August, including record any-month penetration of 30.7%. Furthermore, one of the strongest sectors of the CUV group, imports, which recorded a 34% year-over-year sales rise in August, increased inventory 4.5% from July. Domestically produced versions, in several cases capped by production capacity constraints, increased 0.3%.

The combination of total LV inventory 3.3% above year-ago, and stocks of CUVs, the strongest-growing segment group, increasing month-to-month, points to a fifth straight 17 million-plus SAAR in September.

Truck penetration could decline from record-high August penetration of 57.3% as inventories of pickups, the fastest-growing group next to CUVs, were pared, as were SUVs. However, a strong year-over-year increase from Ford’s F-Series is expected now that the redesigned ’16-model is nearly up to full availability, and General Motors and FCA US could continue solid year-over-gains with competitive pricing, keeping penetration of pickups above year-ago levels.

Interestingly, Toyota, the fourth-biggest player in the pickup segment, has whittled inventory of the fullsize Tundra to 55% below year-ago, and stocks of the redesigned Tacoma small pickup were halved during August following another big sales gain.

Because the ’16 model year starts in earnest in October there could be some additional stock-clearing moves in September, especially of small and midsize cars, to cut inventory of ’15 models.

Among the major automakers, only FCA increased inventory from the prior month, and that was due to rebuilding stocks of its minivans, which were depleted from an extended tooling shutdown at the factory where they are assembled.

Honda and Toyota recorded the biggest July-August declines among the top-volume manufacturers. Toyota’s downturn was due mostly to the aforementioned pickups, but SUVs also took a solid hit. Honda’s cut was centered on midsize cars.

Increases from July in pickups, fullsize vans and luxury cars nearly kept Ford’s total inventory from declining. Most of the automaker’s cuts were with midsize cars, but CUV stocks also fell.

What could be small inventory buildups at GM for the Chevrolet Cruze small car and Malibu midsize car before each undergoes a major redesign for next year, partially offset declines in CUVs, pickups and fullsize vans, limiting the automaker’s overall drop.

Nissan’s inventory fell from July, but by only 0.1%. Increases in trucks almost offset shortfalls in cars.

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