New vehicle inventory fell while used vehicle inventory rose over the course of December 2023, as demand continued to fluctuate in response to post-pandemic market conditions.
At its highest point, new vehicle inventory climbed to 2.73 million units in mid-December, up from 2.56 million at the start of the month, according to Cox Automotive. However, inventory declined to 2.66 million by the start of January 2024, reflecting a relatively swift drop in the final weeks of the year. Days’ supply thus fell to 70 days from 73. Contributing to this decrease were impressive sales, which made a surprise recovery from November to reach 1.41 million units, up 13% from December 2022.
On the other hand, used vehicle inventory improved steadily throughout December, reaching 2.39 million units at the start of 2024. The number represents the highest supply level seen since late 2022 and a year-over-year increase of 4%. Despite the increase, days’ supply remained unchanged from November at 56. Sales for the month concluded at 1.3 million, up roughly 2% from the prior-year period, according to Cox Automotive.
New and used vehicle inventory have fluctuated heavily over the last four years in response to conditions created by the COVID pandemic. Due to quarantines and other disruptions, automotive manufacturing ground to a halt in 2020 and remained heavily constrained until early 2023, leading to low levels of supply. As a result, most car buyers turned to pre-owned dealers while others elected to keep their current models for longer; both factors resulted in additional shortages in the used vehicle market.
Automaker production made an impressive recovery over the course of last year, drawing demand away from the used segment. Despite the reprieve, pre-owned inventory remains lower than historical levels, leading many dealers to rely on a variety of acquisition channels as opposed to auction-only approaches.