For more than two years now, new vehicle inventory has remained historically low as automakers struggle to produce vehicles amid numerous supply chain shortages. In fact, back in December 2021, Ford inventory stood at just 40 days’ supply, which was actually better than many of its rivals, but also well below the previous year, when days’ supply stood at 68. Things were far more grim as recently as Q3 2022, when Ford inventory sunk to just 19 days’ supply. However, the latest data from Cox Automotive shows that things have improved considerably over the past few months.
In December, Ford inventory grew significantly, to just over 70 days’ supply, which is higher than the industry average of 58 days, too. In total, there were 1.80 million units of unsold new vehicle inventory at the conclusion of the year, an improvement from 1.62 million in November. Year-over-year, supply grew by 715,000 vehicles, as well as 500,000 since this past September, while overall days’ supply jumped by a substantial 65 percent.
Regardless of this improvement, inventory levels remain low compared to the 2.87 million vehicles – good for a 68 days’ supply – available in December 2020, as well as November 2019, when supply hit 3.50 million vehicles for an 82 days’ supply. New light-vehicle sales rose five percent year-over-year and 12 percent month-over-month to 934,189 units, though as Ford Authority recently reported, average transaction prices once again reached a new record high in December. Regardless, all signs point to incentives possibly making a comeback in the near future.
“New-vehicle inventory climbed through December, nearing what used to be considered ‘normal’ levels in the pre-pandemic era,” said Charlie Chesbrough, Cox Automotive senior economist. “Days of supply at the end of December increased due to production and supply improvements. But sales barely budged. While new-vehicle supply rose 37 percent since September and is 66 percent above a year ago, the sales pace at the end of December had improved by a scant 2 percent. If this trend continues – and it seems likely to do so – automakers will be under heavy pressure to move the metal with higher incentives. This will be the story to watch for in the first part of 2023 – automakers returning to discounting.”