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Understanding the Current Inventory Situation
The automotive landscape is undergoing significant shifts, particularly highlighted in the latest Lotlinx Q1 Report. According to the report, dealerships are facing increasing challenges as the carryover inventory of new vehicles has risen by eight percent this year. This rise brings the total carryover of new vehicles to an alarming 60 percent, marking a 14 percent increase compared to a year ago. Additionally, the carryover for used inventory has also escalated, now sitting at 53 percent, which reflects a five percent increase quarter over quarter.
Implications for Dealerships
This situation poses a dual challenge for dealerships. On one hand, the tightening of supply amid mounting carryover inventory means dealerships must find ways to move their unsold stock efficiently. In fact, new vehicle day supply has dipped to 77 days—a drop of just three days since Q4 2024, but it’s an increase of 19 days from the previous year. This means that while some brands are severely overstocked, with Ford, Volvo, and Infiniti having more than 100 days of supply, others, like Lexus, Toyota, and Honda, boast much lower turnarounds, under 50 days.
The Rising Trend of Used Vehicle Sales
Despite the inventory challenges, there's a silver lining: used vehicle sales are witnessing a notable increase. Recent data indicates a steady climb of 10 percent quarter over quarter in used vehicle sales, attributed largely to shifting buyer priorities toward affordability. The average list prices of used vehicles have actually declined three percent this quarter and four percent year over year, highlighting how competitive the used market is becoming.
The Role of EVs in Today's Market
The report also sheds light on electric vehicles (EVs), which faced a setback in Q1. Sales for EVs dropped at a rate of three times more than ICE (Internal Combustion Engine) and hybrid vehicles. Interestingly, turnover rates for EVs did show improvement, with EV day supply reducing by seven days year over year. This indicates that while adoption is hesitating, supply chains may be adjusting to the new demand or consumer behaviors regarding electric mobility.
Looking Ahead: What Dealerships Must Do
For dealership owners and GMs, the key takeaway from this report is the shifting landscape of automotive inventory management. With increased carryover and tightening supply, proactive strategies focusing on aged inventory are essential. Dealerships must adapt rapidly to pricing changes that might ripple through the market as new vehicle sales decline three percent quarter over quarter, despite a surge of 19 percent in March due to the urgency created by potential import tariffs.
Ultimately, the data from Lotlinx serves as an important reminder for dealership owners: adapting to market fluctuations and shifting consumer preferences is paramount for survival and competitiveness in the evolving automotive industry.
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