Dealer profitability remains high, inventory supply falls short – Charlie Chesbrough | Cox Automotive

It may be a different industry that emerges from this says, Charlie Chesbrough.

Today on Inside Automotive, we’re pleased to welcome back Charlie Chesbrough, Senior Economist and Senior Director of industry insights at Cox Automotive, to discuss the latest auto sales and inventory numbers, as well as his predictions for Q2.

The industry has been stuck in a holding pattern since August, says Chesbrough. Not much has changed in the new vehicle market over the past few months largely because supply challenges are still plaguing automakers. Chesbrough doesn’t see anything that will change these circumstances for March.

“Our hope is that when we get to the Spring, we’re going to start to see the inventory situation improve a bit,” says Chesbrough.

Monthly new-vehicle sales volume has averaged near one million units since August, and February was no exception. The reality is, there is not enough vehicle in supply to meet the current demand. Vehicle prices are also high and there are few options available to customers. Until the supply changes dramatically, the industry will be stuck in this holding pattern.

Despite this, dealer margins remain high and prices should stay up. The SAAR (seasonally adjusted annual rate) for January of this year was around 15 million and February came in slightly above 14 million units. According to Chesbrough, the SAAR could look worse in March because initial projections were 1.6 million new cars sold, but the volume just isn’t there. What’s interesting to note is that 2021 revenue levels are equaling levels in 2019, with nearly two million fewer vehicles sold.

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