Auto inventory is piling up, especially EVs. What does that suggest about sales?
How Much of the Recent Surge is Real?
The CarDealershipGuy on X comments …
[NEWS] New vehicle inventory is surging 26.4% YoY: But demand is barely budging. Why? New car prices are stuck at elevated levels… For 13 straight months, new car list prices have hovered around $49K. And while sub-$30K vehicles are gaining traction, growing 51.8% YoY — They still account for only 13% of the market. Bottom line: Inventory is improving, but without meaningful price drops, demand will likely remain muted.
Q: Why does that matter?
A: The Commerce Department counts sales when they are shipped to dealers, not when actual consumers buy them.
It more of the glorious accounting that we are accustomed to. But eventually those cars will have to be cleared. And the only way that will happen is with incentives.
New Car Inventory Skyrockets
Please consider New Car Inventory Skyrockets but Prices Hold Stable in Oct.
Looking ahead: Electric vehicles continue to see the most volatility compared to other segments.
- New EV supply is up 35%, far more than the average for new cars and three times more than used EVs.
- But, while the market is dominated by new EV listings, used EVs are seeing most of the demand. Cars.com tracked 5.5 times the number of searches for preowned EV listings compared to new EVs.
- This makes sense, as used EV prices have declined sharply over the last year, falling 9.1%. Meanwhile, new EV prices are down only 1.9%.
Bottom line: While the market continues to shift due to various factors, the relationship between prices and demand is evident. Sellers seem to have found an equilibrium for now, but moving the needle forward will likely require an influx of cheap listings in the months ahead.
My Bottom Line
Manufacturers are losing record amounts of money producing EVs that few can afford.
The Biden Administration, via EPA mandates, forced the manufacturers to make more EVs. And despite massive EV incentives, the cars are still not selling.
Trump will soon trash these EPA mandates and get rid of the EV subsidies.
Guess what will happen to new EV sales.
April 11, 2024: Volkswagen EV Sales Plunge 24 Percent in the First Quarter
April 26, 2024: Ford Loses $132,000 on Each EV Produced, Good News, EV Sales Down 20 Percent
May 14, 2024: BYD Unveils the “Shark” a Plug-in Hybrid Pickup Truck Built in Mexico
August 10, 2024: Another Green Energy Company Declares Bankruptcy, Thank Biden’s Tariffs
August 21, 2024: Ford Cancels Plans for Electric SUV, Expects a $1.9 Billion Loss
Chinese Automakers Are Far Ahead of US
Please read think of the the implications of this: Chinese Automakers Are Far Ahead of Ford and GM on Cost and Quality
Unless and until Trump reduces import tariffs (zero chance) or allows Chinese manufacturer BYD to build cars here (over the howls of Ford and GM), then consumers will be forced to overpay for cars.
The difference between Biden and Trump is that under Trump you will at least have a choice between EV, ICE, and hybrids. And that choice will be without Biden’s distortionary incentives and EPA coercion. But you will still overpay, by a lot.
So good luck with those new car sales.
China is CUTTING imports of Price Gouging US oil and Trump has NO CLUE what to do about China CUTTING imports of OVERPRICED US oil that the biggest manufacturer in the world DOESN’T NEED ANYMORE because of EV’s and other renewable energy sources that replace oil, coal and gas that isn’t needed anymore
DEATH to the EPA! These screw-you all year long jackasses need to go! Yesterday!
You really don’t understand what the EPA does or what benefits it brings.
Clean air, clean water, we all want (wanted) that. But once they achieved their goal, they magically found new things that were threatening us. New things that are impossible to prove or disprove, very conveniently.
lol they find things that make you sick and kill you. ohhhhhhh the horrors of stopping sickness and death.
LOL another clown. Back to the days of poison air water and soil. What a LUDDITE
The United Auto Workers will never die. During covid Ford produce ventilators. If the
current wars extend or become nuke the UAW will work 7 days/ week 24 hours/ day. Those who are addicted to pickup trucks will pay double. The US industrial base will produce weapons. The president who promised to eradicate all wars will be involved in a giga war.
Got a friend at the Kansas City plant. Says all production ends in January of next year. Shut down and retool for ev only. Back up and running in 1 year. Sounds like death to me.
Absurd – totally – We are headed the other direction
My question to you: will Trump WANT the war like BidenCO? I agree that Trump may be LEFT with a war due to the NEOCON DEMS!
Putin invaded the Ukraine in Feb 2021.After three years it’s a tie. Putin change his nuclear policy : an attack by one is an attack by all. Trump inherited a more dangerous world than Biden. A year after Hamas invaded Israel Bibi might cont to attack Iran’s nuclear plants. A nuclear Iran is a threat to Israel and Europe. A world with 30/50 nuclear powers and their proxies is dangerous to the US and EuroArabia. The Neo didn’t order Putin to invade Ukraine and Iran’s proxies to destroy Israel.
“Trump inherited a more dangerous world than Biden.”
Dear Leaders always do:
“The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.”
-Mencken.
Emphasis on the last 4 words.
Vehicle prices are expensive on average, but you can still buy brand new small cars for under $20,000 (Nissan Versa 18k, Mitsubishi Mirage 17k). Many Americans however seem to want to buy vehicles with 60k+ price tags with all the bells and whistles and will complain if they can’t afford them.
Meanwhile, gasoline and diesel prices are relatively cheap, and should stay cheap going forward barring some shock. And if you want to see gasoline prices drop further, you should be cheering for more EV and PHEV sales as they will help reduce gasoline demand.
Interesting fact: hurricanes and the flooding that resulted this year destroyed 350,000 vehicles in the US. Which is a small part of the 300 billion in damages.
I had a supposition Trump would win and maybe remove the EV tax credit. So I ordered and purchased a new Tesla two months ago (which I guess boosted Biden’s GDP numbers by bringing my Trump era purchase forward). Base price was below the average car sales price referenced by Mish. With $7,500 tax credit, it was considerably lower.
Handles like a sports car (without the sports car price). Carries more groceries than my Jeep Cherokee. Haven’t found a car yet I can’t beat off the line at a stoplight. When I’ve traveled far away, the Tesla superchargers will give me 50% ‘fill-up’ in 15 minutes. And it costs me $8 in electricity to fill her up completely in my garage.
And you’re right, I won’t use gasoline for that vehicle for the next 10-15 years. So it leaves a lot more for everyone continuing to drive ICE vehicles.
Obviously, not a preferred choice for everyone (especially by the US manufacturers losing money and likely to discontinue EV brands in the future), but my business guess is the current 9% market share will increase over time. Annual car driving savings are large for those looking into the future financially.
Dealership bankruptcy en mass will be the result of stubborn high car prices.
I smell a Ford and GM bailout coming soon.
Sad but true. Instead of letting the patient and prudent get the firesale deals they deserve, the free market won’t ever be allowed to work in reverse ever again it seems. Supply shortages, that’s ok, but supply surplus, oh heck no, bailout please! We should destroy them! Send them to Asia and sell them for one third!
ZH did a recent article from Bloomberg Intelligence on the subject of car sales and financing.
When you borrow at variable rates and interest rates go up that happens.
It should be illegal for any car financer to roll the trade-in’s negative equity into the new loan. Maybe a tiny amount like 1,000 but that’s it.
The world in general and the urban industrial economies in particular are depopulating. An plentiful supply of oil for the survivors is assured.
I predict demand for all vehicles goes down after January 2025. Many are going to have buyers remorse on the Trump economy.
There won’t be a Trump gold paved yellow brick road for all to dance down? Hearsay! /s
Trump is inheriting a historically pumped-up economy and market(s) with incredibly cooked books to boot. So the chances that this Trump administration will disappoint, bigly, are VERY HIGH. 15 years since the last recession is a bad enough situation. But there’s many, many very necessary non-economic things that he intends to do hat will still make people not have overall buyer’s regret.
Anecdotal: local GM dealership lot is busting at the seams. I sure hope by the time I want or need an ICE vehicle that the local dealer finds itself between a rock and a hard place to move product. I want them to blink first.
I doubt they will ever let the free market work in the favor of the patient and prudent again. They will slash production and/or toss them into the ocean before giving them away as the free market dictates they should. That being said, 10k discounts on full size trucks are very common now. But the problem is those trucks were all 20k too expensive, not 10k (for the entry level ones anyway, because the high end ones were like 40k too much and more!)
Nice to see you write on something besides Gaetz. Dealers are done and refusing allocations, but this is old news. The real question is how much did the big 3 have to lose before they give in and do what they know. Ford show have bought a bankrupt manufacturer and rebranded. Sold Ford long time ago
New car sales are going to continue to tank even with large incentives. 40% of cars financed since 2022 are underwater. There will be a significant increase in reposessions. Link: https://www.zerohedge.com/markets/nearly-40-cars-financed-2022-are-underwater
A lot of people can’t afford a new car. Used and reposessed cars will be the majority of sales.
We’ll be looking to buy a new car in Autum 2025 ONLY if we can get a really good deal.
Cars are underwater as soon as you drive one off the lot.
Well yes, but the plan is, at least for me, that the car will be lasting and in good condition for 12+ years.
That’s my baseline at least. I’m always shocked when dealers or even people seem to assume I’ll be buying another car in 5-7 years. Insane. On what planet???
Our last Sedan was over 15 years old and had an odd and unusual issue with the Fuel Injection which a local mechanic could not sort out. We dumped it.
Yep… guess some people still have trades/downpayments.
Used cars always are majority of sales by volume (maybe not by $$ volume tho).
New cars are sold via better financing …if that drys up, then tits-up.
Upcoming tax-cuts will be HUGE for US… maybe tRump declares a mini-tax-holiday for first 6 months and reduce withholding or something silly.
Not if you pay cash, hombre! Then it’s just depreciation!
If searches equaled sales, most men would be married to porn stars.
Good point!
With 50% reductions in price (Discount/Rebates) at retail and point of loan signing $60k EV’s will cost the consumer $15k. Best economic incentive since forever and every merchant still gets their full price. Its simple math and accounting, all you have to do to see it is drop your worn out orthodoxies and actually look at its temporal universe effects.
Oh great, Mr. Rebate is back. Please go away again.
Look at the earthly effects of the policy.
You didn’t actually do that did you.
But, if new EV’s don’t sell, what is President Musk going to do? Fly to Mars?
He’s got other irons in the fire to fall back on!
Funny no mention of Auto Workers Union and its relation to way overpriced new cars (thankfully Elon DGAF)
2025 Honda Accord from $29K. 2025 Accord hybrid from $34K. 2025 Toyota Camry hybrid from $29K. That’s a $5K discount.
Why are the Chinese vehicles so much better in quality and price? Hard to understand, is it labor cost differences? Govt subsidies? What has Ford said in regards to the huge differences and how to corect this disparity. I doubt they are that much more advanced in their engineering and technology?
Chinese labor.
And more robotics used in builds.
When you build enormous pickups so high off the road you need a stepladder, the price tends to be high as well; however, while the Fed subsidizes interest rates, it isn’t a problem. Note that underwater car loans are now increasing.
The legacy costs (from past union contracts) have always plagued the US car manufacturers
Given how much full size (and even medium sized) trucks inflated in price, I am shocked that Kia and Hyundai never made a few models themselves. They are capable of making “macho” trucks too. Nobody would want them at first, of course, but they would have so much profit margin to play with that I think they could easily undercut the big three by so much that a lot of the big-three faithful would defect for economic reasons. I guess I am missing something, but I see the Koreans leaving TONS of money on the table. And before people say Nissan tried, there was nothing wrong with the Titan, except for the high price. It needed to be much cheaper than a domestic rig to win marketshare and for some reason Nissan refused to undercut.
Maybe they have superior quality control.
To have Wall Street stranglehold over you or not to have, that is the difference.
My wife traded her 2015 MDX for a 2024 MDX Advance a week ago. The 25’s are out so she was looking for a better deal on a 24 demo as her 2015 was starting to get rusty and had 100K miles. First dealer she went to in Indianapolis advertised one, but when she got there it had just sold. She ended up driving to Chicagoland and was able to buy one with 4000K miles on it with an extended CPO warranty (6 years b-b) (7 yr/100K mile powertrain). They sold it to her with the added warranty as a demo for $58K, MSRP was $68K. She paid cash, but I believe the best financing was 4.9%. Car prices are crazy, but so are stock prices and fortunately we’ve done well enough to have had the cash available for the purchase. Great car btw, so many bells and whistles it can be a distraction just driving it. We could’ve bought a nice Tesla, but decided it would be quite inconvenient when we want to actually go somewhere further than 300 miles. Maybe buy an EV in 10 years when we’re ready for something new.
BTW, the Acura ZDX EV’s are not selling. Plenty to choose from and dealers making deals to move them off the lot. Nobody wants them.
“She ended up driving to Chicagoland and was able to buy one with 4000K miles on it with an extended CPO warranty (6 years b-b) (7 yr/100K mile powertrain). They sold it to her with the added warranty as a demo for $58K, MSRP was $68K.”
$58k for a car with 4 million miles on it???
LOL, forget the K. All these dollar signs have me going batty.
Trump’s stunts will only please his aging oil billionaires, but will not make a dent into the problem. More fuel inefficient cars will not be significantly cheaper than fuel efficient cars (the cost of the inputs is high). Tariffs will be the nail in the coffin. The only way to solve the problem is for wages to rise significantly so that people will be able to afford buying cars again. But this is not what his billionaire backers want.
But still lots of ordinary people were dumb enough to believe in the magic wand.
Similar to most statistics you see and/or read today; it is anybody’s guess, at best.
Ford and GM hiked their pickup trucks prices by 50% since 2020 to finance their EV projects. They were fully committed to EV willing to sacrifice their winner : F-150 and Silverado. EV sucks. Pickup trucks hardly move due to their overextended prices and financing cost . Most car dealers still have many 2024 trucks and cars. They are waiting for black friday and xmas sales to clear old 2024 inventory. Within a few weeks we will know if retail sale were successful or a bust. Xmas sales are more important than NVDA E bs tomorrow.
I bought my 2020 F150 4×4 reg cab long bed XL for $29K just before Covid craziness. Today the same truck starts at $45,000. This is a basic work truck with vinyl seats and a regular cab. Prices are nuts.
$30K + $15K (50%) = $45K
i seriously doubt GM/Ford hiked pickup prices to finance their EV projects. These are vehicles with a high ‘index of passion,’so they hiked because they could–price on perceived value, not cost. Doing so also developed value expectations for the EV models, at a still higher price.
The linked story is hard to tell how much info (if any) they include for Tesla. My understanding is that Tesla does not report US inventory numbers the way other US car manufacturers do. And that’s important because it’s also my understanding the Tesla Y was the #2 selling new car in the US in 2024 (at least through Q2) behind the Toyota Rav4 and in front of the Ford F150. Plus 8-9% of new sale market shares for battery electric-only EVS – not even including the hybrids
Guess which EV manufacturer will survive and prosper?
I think we all have that figured out..
BYD 🙂
Bite your tongue or finger!
Tesla has been, and is is now FULLY a defacto government asset/liability (with the profits remaining private of course). It cannot fail for four years at least. Evil genius Elon. I am a (highly cautious) fanboy of Musk, but I’m not at all thrilled about how fascist his presence at the top feels.
It has worked for at least a few Berkshire holdings. If Buffet can benefit surely there is enough money in the country’s budget to support someone else. Elon does have more descendents to provide for after all.
Car and especially truck prices are high for different reasons.
Toyota and Subaru keep tight inventory, only about one month, and can get away with it because of demand.
Ford and GM have to subsidize EV losses.
VW is an puzzling story. It is shutting down factories in Germany to improve finances, but then why did it sink billions in Chinese Xpend and money losing Rivian? It cannot compete with Chinese EVs and debt is almost 200 billion, too…
Still not as bad as Stellantis.
Expect some high profile bankruptcies which will reduce incentives to cut prices.
“Toyota and Subaru keep tight inventory”…In a truly undistorted market, you can’t get away with games like that forever. SOMEONE will win over your prospective customers with a better proposition and ample supply. Since Toyota’s quality/resale is hard to beat, the proposition would come in the form of price/features, but a number of macro and micro shenanigans have disrupted that old, reliable equation.
Agreed! EV sales are weak and likely responsible for reported excess dealer inventory. Toyota, Honda and Subaru, having relied on Chinese parts manufacturers, still not able to build to the demand and have the lowest dealer inventories. Toyota has shifted Camry mfg from ICE to Hybrid as the demand is there but the Hybrid has wider margins and customers are willing to switch. The Manheim Used Vehicle index still holding above 200 with demand for older, gasoline vehicles telling us the level of consumer sentiment is not EVs. The US monthly sales level(SAAR) only reached 16mil and remains stalled just below this level last 2yrs. Once Asian mfgrs get their supply chains in line, there will be a pop to 17mil+. When this occurs is not clear.