Inventory At US Car Dealers Falls To New Record Low
As discussed yesterday, US light vehicle sales for September came at a seasonally adjusted annualized rate of 12.2MM per Wards and 12.3MM per Motor Intelligence, a number below consensus expectations of 12.5MM. A US SAAR in the low 12MM range is down about 25% yoy from about 16.3MM in September 2020 and down in the mid single digits sequentially from the August SAAR of about 13.1MM. The biggest reason for the decline is the continued record low inventory levels.
Some more details:
In September, car sales were down about 33% yoy, SUV sales were down about 20% yoy, and pickup truck sales were down about 30% yoy. Pickups and SUVs as a percent of total units were 19% and 55%, respectively (vs. 20% and 51% in September 2020). Per Motor Intelligence, Ford sales were down about 18% yoy and GM sales were down about 53% yoy in September. Ford’s market share in September increased yoy to 15% from 14%, and GM’s market share declined yoy to 11% from 17%. We believe that GM faced particularly acute challenges in 3Q21 (after doing relatively better in 2Q).
Contrary to ICEs, September EV sales were up about 26% yoy, and hybrid sales were up about 32% yoy, per Motor Intelligence. Notably, Tesla does not report monthly sales. That said, Tesla reported strong 3Q21 global deliveries that were +73% yoy, implying that its EV sales in September in the US were likely strong.
Incentive spending per vehicle was down over 40% yoy, and down about 3% sequentially in September. Not surprisingly, in a market that has never been tighter, September’s industry incentive spending per vehicle was down over 40% yoy and down about 3% sequentially to about $2.4K per vehicle (per Motor Intelligence). Industry pricing should remain strong as component shortages continue to weigh on production in the short term, and dealer inventory remains low.
Finally, the punchline: according to Goldman, inventory at US dealers declined sequentially to ~900k from just below 1.0 mn in August 2021, and down from 2.6 mn in September 2020. Industry DOI came in at 22 days compared to 23 days in August 2021 and 48 days in September 2020. Pickup truck DOI was 35 days (vs. 32 in August 2021 and 48 in September 2020), SUV DOI was 20 days (vs. 21 in August 2021 and 47 in September 2020), and car DOI was 16 days (vs. 18 in August 2021 and 51 in September 2020).
Inventories at dealers continued to fall from already historically low levels, and it will take time for inventory at dealers to return to normalized levels given the strong demand for vehicles coupled with ongoing supply chain challenges (particularly with semiconductor chip shortages, but also due to shipping constraints).
Similar to prior months, historically low inventory levels at dealerships continue to weigh on industry sales, and since nothing is likely to change in the short-term, finished vehicle inventory supply/demand will remain tight over the near to intermediate term and weigh on industry sales, driven primarily by supply chain issues (such as semiconductor shortages) coupled with strong sell-through (demand indicators are generally strong, albeit moderating slightly). As a result, most strategists expect new vehicle pricing to remain at a high level in 2021 and decline only modestly over the course of 2022.
Wed, 10/06/2021 – 19:10