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Inventories of new vehicles on dealer lots and in transit at the end of July dipped from a month earlier and remain stuck at the same woefully low levels where they’ve been all year that constrain sales, frustrate dealers, and turn off customers. This scarcity continues to push up prices to new highs.

But the mix of those inventories is changing with red-hot demand for fuel efficient vehicles depleting inventories of minivans, sub-compact cars, compact cars, and midsize cars to nothing-on-the-lot levels, while inventories of full-size pickups and SUVs are building, and some brands have reached very high levels, at the top of which are Ram 1500 trucks with a worrisome 88 days’ supply.

By the end of July, there were only 1.09 million new vehicles in inventory on dealer lots or in transit, the lowest since February, and in the same desperately low range all year, according to data from Cox Automotive. This was down by 70% from July 2019! With some vehicle segments essentially sold out, and with inventories building in other segments.

Days’ supply at the end of July declined to 37 days, from 38 days in June, same as in January. By comparison, in 2019, supply averaged 89 days.

Essentially out of stock: Small fuel-efficient vehicles. 20 days’ supply, which includes inventory on the lot and in transit, means that many dealers are essentially out of vehicles when you show up to buy. Here are the top-selling segments with about 20 days’ supply, according to Cox Automotive data:

Suddenly plenty of supply: Large vehicles. 50 days’ supply and up. So overall, there is plenty of supply. When supply gets to 70 days or 80 days, there’s too much supply. There’s 88 days’ supply of Ram 1500 pickups.

Some of these segments (pickups especially) were super-hot during the pandemic while fuel prices were low. But this year, fuel prices hit the pain-threshold, and vehicle-purchase preferences adjusted. The top-selling segments with 50 days’ supply or more:

Time for that $10,000-off-MSRP ad for the Ram 1500? Instead of these obnoxious MSRP-plus-addendum prices? Oops, already happening. Results may vary, but I just checked at one of my local Ram dealers, and they had five Ram 1500 Quad Cabs and Crew Cabs in stock, model year 2022, and after various factory and dealer discounts and rebates, the advertised price was $3,000 to $9,000 below MSRP. That part is back to normal.

Sales handicapped by shortages of what’s in demand. Supply is a function of inventories and sales. By the end of July, inventories were very low overall, but there were essentially no inventories of fuel-efficient cars that are suddenly in high demand, while inventories of pickup trucks and full-size SUVs are building, as demand has weakened.

So overall inventories were very low, and sales were horribly low, handicapped by this weird mix of inventory shortages and wrong inventories.

Shortages of specific microcontrollers and semiconductors that the auto industry uses for mundane things on a vehicle continue to dog production and trigger plan shutdowns and production cuts.

The industry has attempted to keep plants running by building vehicles with some components missing and putting them on storage lots until the missing component arrives. For example, at the end of June, GM had 95,000 unfinished vehicles on storage lots. That would represent 8% of total sales in July that didn’t happen because the vehicles, though built, weren’t finished and couldn’t be sold.

There is starting to be a glut of chips that are used in crypto mining rigs, PCs, and smartphones – but they’re not the specialized chips and microcontrollers that automakers are using.

Only 1.128 million vehicles were sold in July, according to data from the Bureau of Economic Analysis. Compared to July last year, when inventories were already a problem, sales were down by 12%. Compared to July 2019, when there was plenty of inventory, sales were down by 19%.

These are sales levels first seen in the 1970s – horrible sales in a horribly mature industry dogged by inventory shortages:

Average prices keep jumping from record to record. The average transaction price jumped by 12% year-over-year to a record $48,182 in July. The average listing price jumped by 11% year-over-year to a record $46,400, according to Cox Automotive data.

In dollar terms, over the past 12 months, the average listing price jumped by $4,600; and over the past 24 months, it jumped by $8,159. These kinds of price increases, on top of already very high prices, are crazy when you think about it. And eventually, people are going to think about it, but not yet apparently.

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Plan ahead. Buy a vehicle you can live in.

Nah. Buy a vehicle you can afford, and that does what you need it to do.

We just got back from vacation. We needed a rental that could fit 7 plus luggage. Reserved a Ford Expedition, ended up getting a 2022 GMC Yukon Denali, loded to the t!ts. Wife liked it, asked why I’ve never mentioned it. I asked her to look it up and build it as we got it. $81K.

It’s nice, but not $81K nice. You could live in that thing. Our 10 year old Pilot does the job like Wolf says, but it lacks pizzaz. Again, pizzaz doesn’t seem to be worth $81K. Replacement cost for our Pilot as a brand new car would be $40K. Most people would agree buying two SUVs seems kind of stupid when you only need one. Different strokes for different folks.

I have to wonder about the minivan numbers. I used to own one and that was not what I’d call fuel efficient (20 mpg overall). Can’t beat it if you have to haul a lot of people or stuff though. When I sold mine one of the potential buyers did camper conversions.

Minivan fits the people, but not the luggage.

My only exposure to modern minivans over the last several years has been by rentals. The Caravans had the mid row and back seats which can disappear in the floor.

Just wait until the vehicle is in stock…About a year from now…

All I can say is “good!” I’m sick of these gas guzzlers hogging up the road, parking lots and school pick- ups. They use up more than their fair share of a finite resource. It’s about time the chickens came home to roost.

Lithium is a finite resource.

The world could face lithium shortages by 2025, the International Energy Agency (IEA) says

Not easily or cost effectively recycled if it’s bound up in batteries. Only a few plants have been built to even attempt this.

There hasn’t been enough supply of 8-10-year old EV batteries for recycling because there were hardly any EVs sold back then. So you don’t need lots of plants to recycle them. This is going to ramp up slowly, as these old batteries are taken out of use.

More interestingly, utilities are starting to RE-USE the old EV batteries for the grid. These batteries don’t need to be top notch because they stack them, and space and weight are not an issue. Utility-scale battery installations can be used to deal with demand spikes and other purposes. But what folks are now figuring out is that they can use utility scale battery installation to arbitrage electricity prices, charging the batteries (buying electricity) when prices are low and selling the electricity when prices spike. This is apparently a very profitable business – and somewhat unexpected. And it’s becoming the dominant use of batteries in the grid. The EIA did a report on it recently. And that’s where old EV batteries will be going. And they’ll be making someone some money :-]

And after utilities are done with the old EV batteries, they’re headed to the recycler. So this is many years after the EV was first produced.

so you are saying the IEA didnt factor this in but you noticed you should let them know

People have been talking about the “lithium shortage” off and on since 2015. And production keeps rising as needed.

A high price solves all this. Eventually the lithium shortage talk will end in a lithium glut, and the price will collapse.

It did that before, most recently between Nov 2017 and May 2020, when the price of lithium collapsed by 84%.

Wolf, good to know about lithium battery REUSE. Recycling to recover lithium metal was what I was referring to, which has been proven to be difficult from spent batteries. Maybe as time and research goes on, a viable solution will surface.

If there is a big movement to reuse EV (and other large) batteries with some loss of capacity for the EV, that will sure help create a good business and help solve some problems. Home and some commercial solar systems can benefit from battery storage for night use when the panels can’t produce.

More and more electric cars, more and more fat people climbing into them.

Can’t ride a chicken without a saddle.

Haha!!! I don’t know what that means, but I like it!

There is a chip shortage. It is supposed to be worse in America than other areas, except in Russia where they can not import cars or auto parts.

The U.S. is supposed to get new chips supplied later this year or the next, if production is delayed. There are new inventions demanding chips. Autonomous vehicles, driver assist systems, and robotics need more chips.

An article came out earlier in the week about the semiconductor maker “Micron”. They specialize in memory chips. They are saying that there is a fall in demand. I have a suspicion that we will hear more about this.

Memory chips are used primary in PC’s and graphics cards. Demand for those have dropped off. My PC is five years old and I see no reason to get a new one.

Fall in demand: PCs, smartphones, crypto mining rigs.

Consumers loaded up during the pandemic, they all have what they want. And now cryptos crashed. It’s very specific. They all said that: Micron, NVIDIA, etc.

Russian car production is down 80%. They depend on Western parts, of which integrated circuits (chips in the vernacular) are only a subset. Retired now but I was an engineer. I would design circuit boards for test equipment and order IC’s (my preferred term; chips remind me of potato chips) for those. If it was in stock in Digikey I would design it in. Never a problem getting them, of course my needs were low volume. The IC (OK chip) shortage is a mystery to me.

Industrial ICs typically use older fab technologies maybe a couple of generations behind the leading edge or more. A good way to squeeze out a few more dollars from an obsolete fab. The main problem is that there is little profit to be made on these ICs. Intel or TMSC would like to see 50%+ gross margins after investing $5B in a state of the art fab. One could port the designs of these old microcontrollers to the new fabs but their price would go up 5x.

We all (esp. the West) need to use less [list of everything here]. : )

Just listened to a “Boots on the Ground” report where a correspondent said their vehicle manufacturing plant shutdown for a day because there was NO PLACE TO PARK THE VEHICLES that would’ve been produced. The report indicated there is work underway to create another parking lot for, I think 10,000 vehicles. Guess those chips aren’t showing up soon.

Make sure to add that these are UNFINISHED VEHICLES waiting for components.

At the end of June, GM hat 95,000 UNFINISHED vehicles parked on storage lots waiting for components. Other automakers did the same. There are hundreds of thousands of unfinished vehicles parked on storage lots in the US waiting for components. They do this to keep their plants running.

This chip shortage is still creating a huge mess.

So can we imagine a point where it tips the other way and we see a sudden glut of cars once chip production catches up?

Yes, I’m waiting for it.

But by now, something like 3-4 million consumers that would have bought a new vehicle since the summer of 2021 didn’t because they couldn’t find what they wanted to buy and decided to out-wait this mess. If this goes on for another year, there will be something like 7 million people that are eager to buy a new vehicle, that would have bought one but didn’t. This is in addition to whatever other demand there will be.

My gut feeling is that automakers will be making vehicles for which there is not enough demand when supply starts catching up, but will be short on vehicles for which there is lots of demand. So I think this is going to be messy even as the chip shortages wane.

Used cars are piling up on lots around here. One public “park and sell” lot near me is jam packed with pickup trucks and large SUVs. And they are just sitting there from day to day.

Chrysler/Dodge/Ram dealer is pounding the TV ad time with deals below MSRP like Wolf says above.

It’s gong to get interesting if we slide into a recession.

I remember the late 70s gas crisis, couldn’t sell them for 50 cents on the dollar. Can’t believe so many wage slaves bought them in the first place. History will repeat itself with Corolla and Civic being in demand and sold over MSRP. Meanwhile, warning light on in our 2008 and freaking out about having to find a Corolla or Camry. Need to hang on for a while, fingers crossed.

I just glued together a 100K plus ’06 Civic for my daughter to use as a sacrificial car in the LAX parking lot. Your Corolla has lots of life left in it. Buy a code reader and, if you’re the least bit handy, you will likely find what is wrong with it. It can be something as simple as a gas cap that sets off the CEL. Or a leaky vacuum hose. CEL’s (the money light) doesn’t always predict a catastrophe.

The first thing I did with her “find” was to replace all the cheap bits (radiator cap, oil, hoses, thermostat, gas cap, filters, etc..) and spent a day doing that. The interior was a hazmat site. Replaced the schrader valves on the A/C and had it recharged. New tires, brakes, rotors, bled the brakes, fresh oil, coolant, belts, ran a tank of Shell premium through it…. About $1,600 worth of bits and a week’s work and it runs like it’s on rails. Still looks like a hooptie, but you can’t make it too nice or it will get stolen. She bought the car from a friend for $500…. she’s been offered $6K for it.

We are heading for the old days when Honda Civics were the most stolen car and F150’s were the least stolen. LOL

Get one of those code readers for $40 and interrogate the system to see what it is squawking about. I hope it is an easy and cheap fix.

If you drive your car to AutoZone, they will loan you the code reader (FREE) and you can get the code right there in the parking lot.

“It’s gong to get interesting if we slide into a recession.”

It’s going to get interesting as you slide into a recession, and not in a good way.

unamused, what makes you think I have any possibility of sliding into a recession in a bad way? Do you know something about my situation?

Yes, there is plenty of supply of used vehicles. Sales are down about 15% from 2021; prices have spiked, and a buyers’ strike has set in. But dealers are slow in cutting prices because there aren’t a lot of used vehicles coming through the wholesale market because new vehicle production has been so slow, and rental fleets are keeping their units longer. It’s this sort of complex interplay.

Days’ supply is above the 2019 average:

Flash backs of the early ’80’s. Cars got small, lighter and absolutely ugly. In some cases dangerously so.

But I’ll still drive my F350. Why? Because I need a 4wd on logging trails year around. I must be evil. Yup. Where does your lumber and livestock come from city boy? There won’t any working EVs around here.

“Where does your lumber and livestock come from city boy?”

Thank god we’re all different. Otherwise we’d all be doing the same thing and trying to drive the same thing.

So as reminder: Without us “city boys,” there wouldn’t be this website, or any of the other websites, and you wouldn’t be able to make your comment known to thousands of people. You’d have to go to your local bar and tell the two people next to you.

Manufacturers stopped selling small cars in the U.S. a couple years ago. Not because fuel efficiency was out of style but because the primary buyers were lower income and they could no longer afford them (Honda Fit was $19K-20K by 2020).

Anyone remember Scion? It was Toyota’s effort to appeal to the younger generations with funky reliable low cost cars. Turns out it was the middle aged and seniors buying them up. The young people couldn’t afford them and the brand was phased out after the Great Recession hit.

Scion: There were two on my street. Both driven by kids – one in H.S. and the other in junior college. Scion was an attempt by Toyota to build a “third channel”, with a required separate showroom (like Mini and BMW) but the project was not viable for the dealer (not enough gross to justify the expense and sales people hated them because every deal was a “mini” deal). The Scions were then mixed with Toyotas (remember the Echo?) on the showroom floor and created customer confusion….. add to that the costs associated with the support of a third channel of parts / advertising, etc., . The rest is history.

Honda had the Element (aka “the toaster”). It was originally intended to be a car for the young adventurer, with an interior that could be cleaned with a hose (of course, someone forgot to tell the engineers who put computers underneath the front seats….). It was commandeered by the dog folks (and geezers) as it was pet friendly. Went through several trim iterations only to be abandoned after one product cycle.

Fit is still being built, but not sold in the U.S.. Production going to South America (made in Mexico). HRV grew and is still available in North America (based on Fit). Many of the vehicles shipped from Salaya, MX to North America suffer huge damage (broken glass, stolen batteries, stolen tires, bullet holes, people sleeping in them and using them for outhouses) despite the guards on the rail cars (bribed by the cartels), locked and enclosed rail cars (they cut holes in them), and promises from Mexican authorities to have the Federales protect the cargo. It is a study in what NOT to do as they have to be “reworked” when they arrive in the States.

The issue is not the affordability for youth. It is that no one wanted the stripper trim. Due to customer demand, the trims went upscale and so did the price. I guess plastic hubcaps weren’t cool. How many hooptie Civics do you see with rims that cost more than they paid for the entire car?

Young people not being able to afford a new vehicle is nothing new – unless daddy stroked a check. I’ll bet that there’s many a story of folks on here describing their duct-tape-and-baling-wired-together scheiss kiste that they drove as a youth.

Small, cheap, low content cars do not sell in the U.S.. Never have. Those that did, sold to geezers. Plus the government mandated safety features (backup cameras, ABS, emissions, etc.,) make it difficult to hit a price point.

Affordable vehicles is the key. Daughter needs a new car both her vehicles have 180k miles and both are in the shop and she has a loaner. She wants a GMC Denali suburban 4wd and can afford it. Her current one is a 2008 Denali 4wd that I gave her at 80k miles she drove 10 years and has a blown cylinder on her second engine. My advise the her and husband are to wait it out a few months and can save a few thousand on a new or used one. But only after reading this great Summary article. Thanks Wolf! I’m never going to live in a car!

I expect GAS Big Car /Truck supply to continue to increase until they stop making them .They are to costly along with Gas to costly

a long time ago now when Toyota VW Etc began the takeover of the Car market America missed the Boat now trying to catch up

Sheer stupidity like the Fed

Don’t let gas prices drop too low. A few months of high prices is not long enough to get the overproduction of antisocial vehicles under control. People need to feel it for much longer. Yes, I’m hoping supply and demand will do what the feds, manufacturers and buyers won’t do. Vehicles are getting bigger, quicker from the line and too safe for everyone in them, at the expense of everyone else. FYI, as a tradesman, I own a GMC 3/4 ton truck with a trim that’s really called “work truck.” GM killed that name in recent years – God forbid a pickup get advertised for it’s original purpose. So yes I can throw stones at vehicular stupidity.

The 2022 Hyundai Elantra starts at $19,950, less than half the cost of the average gas hog, a type that is no doubt insufficiently profitable for US automakers which are really financializationistas that make vehicles on the side.

Americans are notorious for being suckers for overpriced wasteful vehicles.

US automakers got caught with their pants down after the oil embargo in the 1970s with fleets of overpriced gas guzzlers and the Japanese makers ate their lunch, the same ones who now compete with South Korea and other foreign makers for the US auto market because they’ve all figured out how US makers operate.

I do not recommend US-made vehicles to prospective buyers because I have ethics.

My Bentley Mark VII will last forever and will never need an oil change, although I expect new tyres could be hard to come by when the current ones wear out someday, but I’ll think of something. I always do.

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Charts of stocks like these – hundreds of them now – are an indictment of the mania in 2020 & 2021. We’ll be shaking our heads for years.

Biggest investors in single-family houses: “We need to be patient and allow the market to reset.”

Inflation in services is now where the action is, not commodities or durable goods.

Raging inflation ends an absurdity.

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