Auto retailers remain healthy in spite of supply chain calamity

Top of mind for many auto retail professionals these days is inventory — where is it and how do we get it? Today on Inside Automotive, we’re pleased to welcome back Tyson Jominy, Vice President of Data and Analytics at J.D. Power to discuss current inventory numbers and when they might return to a comfortable level.

Back in November, retail inventory pretty much bottomed out at around 810,000 units, says Jominy. While numbers are still low compared to historical standards, the industry is starting the trend in the right direction when it comes to inventory.

The Pacific Northwest and Eastern markets, for example, have more inventory on the ground relative to California, Texas, and Florida. Unfortunately, those are three of the biggest states for car sales in the country. Inventory and production are still driving sales cadence.

“We continue to operate basically on a one in one out basis. Anything that is delivered, is basically sold, and in fact, most vehicles these days, almost half are presold,” explains Jominy.

There is also still pent-up consumer demand. Jominy thinks that if car dealers had more cars available, they would certainly be able to sell them right now. J.D. Power data reveals that there are about 2 million retail sales and 3 million fleet sales still sitting on the sidelines.

Jominy says that J.D. Power expects most of these market conditions to persist throughout 2022 and into the first half of 2023. However, one of the bigger risks auto retailers face is interest rates. While the analysts at J.D. Power haven’t seen the effects of interest rates yet, banks can decide to pull back which will have rippling effects throughout the dealer network.

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