Resilient consumer demand in February spurred new vehicle sales forward but dragged inventory levels down from January’s above-average supply.
The pace of sales intensified last month, moving at a seasonally adjusted annual rate of 15.8 million compared to 15 million in January. This placed downward pressure on new vehicle supply, which totaled 2.47 million units in the early days of March. The days’ supply level, according to Cox Automotive, was 76 days, down from 80 days at the start of February.
March’s initial inventory count reflects a vast improvement over the previous year when manufacturing and supply chain disruptions were still constraining new vehicle production. As has been the case since early 2023, inventory gains have been the greatest at U.S. automotive brands. Dodge carried the most units over the course of February, followed by Jeep, Chrysler, Ram, and Lincoln. Import brands, especially those from Asia, carried the least inventory, with Toyota being the most supply-constrained.
Higher new vehicle sales came with the added effect of lower prices. Average transaction prices dropped 2.2% in February from the previous year to $47,244 but remained higher than before the pandemic. On a month-over-month basis, prices declined less than 1%. Electric vehicle prices suffered the most cooling, falling at a rate of 13% from 2023.
Ultimately, the numbers seen throughout February and into March indicate the new vehicle market is retreating from its pandemic-era peak. Dealers are almost certain to see this pattern repeat itself over the course of 2024. While prices and profits will likely be the most heavily affected by normalization, retailers can use this time to improve customer loyalty through high-quality service and proven inventory strategies.
