Increasing vehicle inventory at dealerships, coupled with a rise in discounts, signifies a market shift in favor of buyers, which is unfavorable news for auto manufacturers who have enjoyed a period of soaring profits.
WSJ cited data from multiple auto data providers that show the market shift and what appears to be an emerging discount wave on new vehicles, granted lending standards remain tight.
The number one reason auto manufacturers experienced a profit boom during Covid was due to supply chain disruptions that led to inventory declines, and cheap credit allowed consumers to panic buy anything on the dealer lot, driving prices through the roof. Now inventory lots are filling up.
According to data provider Cox Automotive, the weekly supply of vehicles at dealerships jumped to 740,000, or about 70% higher, in March than a year before.
More supply at dealers and a declining pool of creditworthy Americans means any remaining buyer has renewed bargaining power. This has led to increased vehicle discounts last month of 3.3%, up almost a percentage point compared with the same month the previous year, according to new estimates by J.D. Power.
Combinate the flood of new supplies with an affordability crisis as new-car loan rates have nearly doubled, and it’s becoming evident that a discount wave is only just unfolding, leading to a future profit bust for automakers.
No one knows which new vehicle to buy. We’re all weary of purchasing a gas powered vehicle because if Biden and the Liberals Progressives have their way, there won’t be any fossil fuels being refined in 10 years. Everyone doesn’t want to purchase EV because of cost and uncertainties about recharging, distances on a single charge, and battery life. I know my wife and I are hoping we’ll be holding on to our 2019 and 2020 gas vehicles until 2030.
Believe that when I see it. Overpriced no matter what.
Great time to be 68
Better time to be 80!