What current auto retail conditions tell us about the remainder of 2021 – Jessica Caldwell, Edmunds

Joining us today on CBT News is the Executive Director of industry insights for Edmunds.com, Jessica Caldwell. Caldwell shares with us an update on the current inventory situation, what kind of market activity auto retailers can be expecting, and some of the causes of the current sky-high pricing.

Caldwell begins the conversation by discussing the current inventory situation. Inventory is tight and getting tighter by the day due to semiconductor shortages and strong demand that wasn’t anticipated throughout the pandemic. Inventory levels are low, no matter where you are. Although it’s a tough market right now, car dealers are still trying to get new or used vehicles on their lot, and they are using creative ways to do just that.

Caldwell believes Q3 will be hit the hardest. April brought many record earnings and sales seem relatively strong. May possibly would have been stronger if it wasn’t for inventory issues. Hopefully, by Q4 and the beginning of 2022, things will go back to normal. 

Caldwell adds that of course not having inventory causes prices to increase. Car dealers are still able to offer lower interest financing for consumers who aren’t getting any type of incentive. Despite these obstacles, car dealers are still selling, and they are hitting record numbers. Usually, inventory is not the issue when it comes to selling cars, Caldwell says. 

When looking at luxury brands, Caldwell says their inventory levels aren’t usually this low. It’s most likely a seasonal situation. Luxury brands may have a better planning calendar as well as lower volume. Ford Motor Company is showing its dominance in the truck market. When they came out with the F-150, Caldwell says consumers expected a great product but not at that price point. As a result, competitors just can’t compete. She says, she wouldn’t want to be an EV start-up truck at this particular time. Car production is extremely complex.

As far as the used car market, Caldwell says, it’s absolutely insane out there. She says what we’re seeing is the new car market trickling down into the used car market. Prices are ridiculously high. Now is the time to sell that car you don’t need and pocket the cash.

Caldwell ends the conversation by stating the silver lining we can look forward to. Generally, auto demand doesn’t go away, it just differentiates to a later time. When consumers come back to the market, car dealers need to know how they can serve consumers best, and get back those consumers that were let go because of limited inventory.

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