New vehicle showrooms are heading into the thinnest run of fresh product on record. On today’s edition of CBT Live, John Murphy, Founder and Managing Partner of Murphy Automotive Partners, broke down the fallout for dealers.
According to the Murphy Automotive Product Pipeline, the vehicle redesign rate has fallen to its lowest level ever. With the average product age reaching 4.8 years next year, customers returning to the showroom will see a vehicle close to the one they bought three to five years ago. Additionally, the price point is 30% to 40% higher, and rates have gone up. Murphy said dealers should push those customers into parts and service over the next couple of years, since the opportunity is to bring them back once new products launch.
The hole in the product pipeline traces back to what Murphy calls the “EV head fake.” Money poured into electric vehicle programs that have since been canceled. Internal combustion programs were delayed to make room for them. Automakers are now pausing powertrain development until they know the rules. A new administration arrives in 2029, and those rules could change again. Hybrids make far more sense for the U.S. market right now, Murphy said. He expects them to climb from about 14% of sales last year to at least a third by 2030.
According to Murphy, dealers stuck with aging new inventory have a stronger entry-level story on the used side. A three- or four-year-old trade-in beats anything an automaker can build at $25,000 to $30,000. That new vehicle has to be decontented for the math to work. For instance, Ford dealers short on entry-level product should build a program around three- and four-year-old Explorers. “When you think about a three- or four-year-old used vehicle that’s trading around thirty thousand dollars, that is the best entry-level vehicle you could offer to your consumer,” Murphy said.
New vehicle sales are holding up better than many feared. The market should land around a 16 million SAAR this year. The next two years could fade from there, Murphy said. He expects a real pickup in 2029 and 2030, reaching a rate of 16 million to 17 million.
