America’s car dealers started the month of October with about 2.26 million unsold cars on lots — 8% fewer than a year ago.
At current sales rates, 2.26 million is about a 47-day supply of used cars. That’s well below the 60-day supply car dealers traditionally aim to keep in stock.
Nationwide inventory stuck at low level
“The number of used vehicles available for purchase has remained higher than the low point seen in early April,” said Chris Frey, senior manager of Economic and Industry Insights at Cox Automotive. “However, the overall used-vehicle inventory volume is still considered to be limited and has been stuck in the 2.2-2.3 million range for the past four months.” Cox Automotive is the parent company of Kelley Blue Book.
Not good news for prices
Thin supplies mean higher prices. Prices fell slightly in August, but analysts think that dip could be short-lived. The wholesale prices dealers pay at auction for the used cars they later sell began to rise in late August after months of declines. Wholesale price trends usually become retail price trends after about six to eight weeks.
Related: Used cars for less than $20,000 have ‘nearly vanished,’ study says
Pandemic will affect supply for years
Kelley Blue Book analysts expect used car prices to remain generally high for several years. Automakers built about 8 million fewer cars during the pandemic. Used car inventories could remain low for years as those cars never find their way to the used market, keeping prices higher than Americans had grown accustomed to.
As with new cars, and as has been the case for months, the lower the price segment, the tighter the inventory. Used vehicles priced under $10,000 had a days’ supply of 32, with days’ supply increasing with every higher price segment to the over $35,000 category with the highest days’ supply of 58.
Also see: Want to buy a new car? You should probably be making $100,000 a year.
Honda
HMC,
Mazda
MZDAY,
and Toyota
TM,
were the non-luxury brands with the lowest inventory of used vehicles through September. Honda had 39 days’ supply, while Mazda and Toyota both had 40 days’ supply. Most other mainstream brands — both luxury and non-luxury — had used-vehicle days’ supply under 50.
This story originally ran on KBB.com.
