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January 24, 2025
After years of shortages, dealership lots are now overflowing with vehicles, marking a significant shift in the automotive market as supply catches up with demand.
New vehicle inventory is back, explained Todd Campau, associate director of the aftermarket at S&P Global Mobility, during his AAPEX 2024 presentation, Trends Impacting the Aftermarket.
“Actually, in a lot of cases, inventory is higher than the dealerships would like,” Campau observed of the current automotive inventory landscape.
Automotive data company Cloud Theory reported this month that new vehicle inventory was up 23 per cent in 2024. As dealers added more than 600,000 units to their inventory, however, sales moved at a slower pace it reported.
High interest rates have slowed consumer demand for new vehicles, spurring a restocking wave, Campau noted. This contrasts sharply with the previous few years when dealership lots sat nearly empty due to chip shortages.
“Now the lots are full. They’re overflowing,” he observed, describing parking lots near Ford’s headquarters in Michigan brimming with unsold vehicles waiting to be shipped to dealerships.
The oversupply is starting to push incentives back into the picture. Although incentives haven’t returned to pre-pandemic levels, they are closing the gap. Most incentives in pre-COVID times would typically be about $5,000. These days, we’re seeing about $4,00.
“We’re not quite back to that level, but it is getting close. We’re probably about $1,000 behind on average,” Campau said.
Despite these adjustments, vehicle prices remain steep, up 32 per cent since 2018. While prices have softened slightly, a return to pre-pandemic affordability seems unlikely.
“I don’t know that they will return to normal. I don’t know that we’ll see it go back down into the $30,000 range,” Campau noted.
Campau’s presentation also highlighted how rising household incomes are helping to narrow the affordability gap. Traditionally, vehicle costs have hovered within 45-55 per cent of household income. However, as prices surged, that gap widened, making new vehicles less accessible. Now, with wages rising, affordability is improving, but not because prices are dropping.
The combination of increased inventory and gradual affordability improvements signals a shift in the automotive market.
“We do expect affordability to increase a little bit. But not because the prices are going down — because wages are going up,” Campau said.
Vehicle inventory swings back, maybe too far
Adam Malik
After years of shortages, dealership lots are now overflowing with vehicles, marking a significant shift in the automotive market as supply catches up with demand.
New vehicle inventory is back, explained Todd Campau, associate director of the aftermarket at S&P Global Mobility, during his AAPEX 2024 presentation, Trends Impacting the Aftermarket.
“Actually, in a lot of cases, inventory is higher than the dealerships would like,” Campau observed of the current automotive inventory landscape.
Automotive data company Cloud Theory reported this month that new vehicle inventory was up 23 per cent in 2024. As dealers added more than 600,000 units to their inventory, however, sales moved at a slower pace it reported.
High interest rates have slowed consumer demand for new vehicles, spurring a restocking wave, Campau noted. This contrasts sharply with the previous few years when dealership lots sat nearly empty due to chip shortages.
“Now the lots are full. They’re overflowing,” he observed, describing parking lots near Ford’s headquarters in Michigan brimming with unsold vehicles waiting to be shipped to dealerships.
The oversupply is starting to push incentives back into the picture. Although incentives haven’t returned to pre-pandemic levels, they are closing the gap. Most incentives in pre-COVID times would typically be about $5,000. These days, we’re seeing about $4,00.
“We’re not quite back to that level, but it is getting close. We’re probably about $1,000 behind on average,” Campau said.
Despite these adjustments, vehicle prices remain steep, up 32 per cent since 2018. While prices have softened slightly, a return to pre-pandemic affordability seems unlikely.
“I don’t know that they will return to normal. I don’t know that we’ll see it go back down into the $30,000 range,” Campau noted.
Campau’s presentation also highlighted how rising household incomes are helping to narrow the affordability gap. Traditionally, vehicle costs have hovered within 45-55 per cent of household income. However, as prices surged, that gap widened, making new vehicles less accessible. Now, with wages rising, affordability is improving, but not because prices are dropping.
The combination of increased inventory and gradual affordability improvements signals a shift in the automotive market.
“We do expect affordability to increase a little bit. But not because the prices are going down — because wages are going up,” Campau said.
