January inventory trends: Advertised prices dropping, a full-size pickup glut, and EVs flattening out

Retail advertised inventory data for January 2024: S&P
Global Mobility delivers the following US new vehicle market
insights:

Overall industry inventories

Available new vehicle dealer inventory listings for the US
market continued to surge as of the end of December. A steady
upward increase in advertised inventories has continued since
August, and now stands at 2.45 million vehicles.

Of course, sales are also on the rise. But plotting
year-over-year inventory growth, versus year-over-year sales
growth, shows that relative to volume, inventories are up 30%.

As inventories grow, listed prices and average MSRPs are
dropping – signaling automakers are building lower-trim models. But
also the number of vehicles with advertised prices listed below
MSRP are growing steadily. At the end of November, the average
advertised discount was $2,742; at the end of December, it had
grown to $3,030 (double the level of December 2022). And that is
the advertised price before negotiations or hidden
factory-to-dealer incentives – such as stair-step volume bonuses –
are factored in.

Average discount from MSRP

Which vehicle segments are hot, and are not?

Perhaps the most flooded major segment, relative to sales, is
that of full-size pickups (more on that below). Meanwhile, the
compact SUV segment has the most inventory – but it’s in line with
overall industry growth – and with registrations humming along at
about 200,000 per month, the C-SUV segment matches the ideal ratio
of two months’ supply.

As far as segments where one could argue there isn’t enough
inventory, the compact car, compact pickup, compact luxury SUV, and
full-size SUV segments are tight on units advertised in dealer
inventories.

Too many full-size pickups?

The full-size truck is a key profit generator for the Detroit 3.
But when too many are on showroom floors, deep discounting happens
in a rush. At the end of December, there were 307,000 full-size
pickups available, up from 229,000 the same time last year.
Meanwhile, the average MSRP has defied the industry trend,
increasing to $63,000, from $59,300 in December 2022 and $55,400 at
the start of 2022. But S&P Global Mobility analysis finds
advertised discounts steadily increased all through 2023, with
$4,740 the current average discount.

Average MSRP and list price, full-size pickup truck

Who is slashing their big pickup prices? Ram dealers, with 75% of
dealer-advertised units below MSRP. The average discount is also
sizably more than that of the tight pack of Chevrolet, GMC, and
Ford. But even Toyota is discounting. Hot take? There is a lot of
inventory out there…deals could be coming.

Average discount from MSRP, full-size pickup truck

The mid-sized pickup battleground looming?

Toyota traditionally outsells its mid-size truck competitors
handily. <span/>But with
the redesigned 2024 Tacoma in factory ramp-up mode, and also in
high demand, inventories plummeted through the fourth quarter. At
the end of December, there were fewer Tacomas in dealer advertised
inventory than Jeep Gladiator or Nissan Frontier. While Toyota
dealers scramble to find units, might Jeep and Nissan dealers seize
on the opportunity to conquest consumers who <span/>can’t wait around for the new Tacoma?

Midsize pickup truck inventories

EV inventories stabilizing

After growing through most of 2023, the end of December marked
the first drop in inventory all year for Ford’s Mustang Mach-E. But
with Ford selling fewer than 5,000 Mach-Es in a month, there still
is sizable backlog. A tougher tale to tell is F-150 Lightning,
which despite cutting production has seen inventory grow from 3,200
units in August to 13,000 at the end of December. At least Ford is
now selling lower-trim versions; the Lightning average MSRP is
roughly $74,000, whereas in December 2022 it carried an average
MSRP of $80,000 plus an $8,000 premium.

Other manufacturers are adjusting their EV inventories to
acknowledge market realities. Most EV inventories – VW ID4 and
Hyundai Ioniq, to name two leaders – have leveled off and are
burbling along between 3,000 and 5,000 units for the last quarter
or two, keeping pace with sales. The only real climber is the
Chevrolet Bolt EV/EUV, but Chevy dealers also are adding more
discounts on its compact EV. The key question still to be answered:
Are we seeing suppressed EV sales due to a lack of inventory, or a
lack of demand?

Electric vehicle inventories

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This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.