When Does New-Car Supply Bounce Back? Not In July, Or In 2022, Either (2024)

FAQs

When Does New-Car Supply Bounce Back? Not In July, Or In 2022, Either? ›

The automotive supply chain will likely never look like it did pre-pandemic, but inventory levels generally recovered in 2023 and are expected to continue doing so in 2024 and 2025.

New inventory is expected to reach pre-pandemic norms in 2024, with almost 3 million units available, or three times the amount during the chip shortage. Days' supply will stay healthy. New-vehicle transaction prices are expected to decline moderately.

Why the car market could return to normal. Cox says new-vehicle inventory will increase this year, returning to levels not seen since before the pandemic, making it more likely dealers will have to offer incentives and discount prices to get buyers in the door.

So, will U.S. auto production ever go back to normal? The simple answer is that it will never get back to where the industry was five years ago. Making the transition to new products and full plants will happen, but the current awkward in-between stage is likely to linger.

Used Cars Feel the Pinch

Unfortunately, it looks like it will take a few years to get back to regular inventory levels with lower prices. Additionally, retail and fleet sales were lower over the past few years thanks to the pandemic-era slowdown in sales and production.

Despite that, prices are still higher than they should be, as a new iSeeCars study found that the average new car is priced above MSRP, though they're slightly less painful than they were a year ago.

Ultimately, the best time to buy a car is when you need one. But if you can wait, you may be able to benefit from lower prices and interest rates in 2024. Just don't expect huge savings.

In 2020 we saw a shortfall of around four and a half million vehicles simply because they couldn't get semiconductors, and we still expect in 2023 that we're going to see a shortfall of around 2.8 million. The global semiconductor shortage is easing, but certainly not resolved as of 2023.

Is car shortage improving? ›

Trading in a Car Now

“After being low for the last two years, used-vehicle supply is expected to improve later in 2024 — but that will be without much help from off-lease supply.” Searching for a decent price for your trade-in is still a good idea by shopping it around.

Though inventories of new autos are still well below the roughly 4 million level that prevailed before the pandemic, analysts and dealers say the rising availability suggests that 2024 will be the most affordable year of the past five in which to buy a new car or truck.

Auto sales climbed to a four-year high in 2023, according to Ward Intelligence data, with analysts anticipating sales could continue to rise in 2024. CFRA analysts said the second half of 2024 could be stronger with the Fed expected to cut interest rates, which could boost consumer sentiment and sales.

Carmakers couldn't turn out enough vehicles to keep dealers' lots full. But last month, according to Cox Automotive, new vehicle inventories hit their highest level since 2020, and the process of buying and selling new cars is reverting back to some of its pre-pandemic ways too.

Domestic Automakers Have Highest Inventory Levels

Many domestic makes had the highest inventory. Dodge had the highest of any make by a wide margin, followed by Chrysler, Lincoln and Ram. Brands with the lowest supply were Asian imports. Toyota had the lowest at 36 days of supply, followed by Honda, Lexus and Mazda.

New vehicle inventory currently stands at 2.66 million units, according to Cox data, which is a 49% increase in the past year. Increased vehicle production and relatively low buyer demand are the main factors leading to the rise — and discounts to lure in buyers.

The automotive supply chain will likely never look like it did pre-pandemic, but inventory levels generally recovered in 2023 and are expected to continue doing so in 2024 and 2025. Car prices remain elevated in 2024 due to inflation but are showing initial signs of decreasing as inventory stabilizes.

"2024 is probably the best year since the pandemic to buy a new car," Mark Schirmer, director of industry insights at Cox Automotive, told ABC News. "2021 and 2022 were really difficult years. Dealers are talking about discounts again ... this was not happening 18 months ago.

Here's what to expect for the auto industry in 2024: 1. Sales of new cars should hit 15.7 million, up from 2023. Vehicle availability has steadily improved after years of shortages, so more shoppers should find a ride to suit them.

Cox Automotive confirms its forecast that 2024 will be the best year for new-vehicle sales since 2019. Sales volume this month is expected to fall 2.2% from April 2023 to 1.34 million units.