Some Automakers Have Nearly Twice the Supply of New Cars They Want

Americans bought a lot of cars in December, helping automakers to draw down an oversupply of new cars. But not every automaker benefitted. Some brands have few cars to sell, meaning higher prices. Others have drastically more than they want, meaning discounts.

Automakers measure their supply of new cars to sell in a metric they call “days of inventory” — how long it would take to sell out of new vehicles at the current sales pace if they never acquired more. Traditionally, dealerships aim for 60.

At that level, industry wisdom holds, your local dealership likely has a combination of colors and features that appeals to you. Too few, and you might have to go elsewhere. Too many, though, is also bad. Dealerships don’t own the cars they sell. They’re making payments on them. So cars that sit unsold negatively impact a dealership’s bottom line.

Automakers ended December with an average of 70 days’ supply. That’s better than the month prior when they averaged 73, but it’s still more than ideal.

Averages, however, are made up of extremes.

34 Days For Some, 100-Plus For Others

Toyota dealers have an average of just 34 days. Honda dealers aren’t far behind, at 41.

Many mainstream dealerships find themselves particularly short of more affordable models and have been asking their factories to step up production of lower-cost cars.

Automakers have gradually abandoned the inexpensive car segment in recent years. As they’ve trimmed the inexpensive models, they have added costlier ones. That has proven out-of-step with consumer demand as inflation and high interest rates have pinched shoppers’ wallets.

Among luxury makes, Lexus has the tightest supply, at 41 days. BMW dealers have just 42.

Shoppers will find it hard to negotiate a bargain at those dealerships.

At the other end of the scale, five brands have more than a 100-day supply of new cars to sell. Mitsubishi leads all brands with 110 days’ supply — nearly double the target. Nissan is the other mainstream brand with a significant oversupply at 106 days.

Luxury shoppers will find fertile negotiating ground at Buick dealers, who have a 106-day supply of new cars, and Infiniti dealers, who have 104.

Truck shoppers might find the most wiggle room at Ram dealers with a 101-day supply. Ram is improving its situation, having been over 110 recently. But dealers are still overstocked.

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