Looking for a new vehicle? Don’t expect many, if any, year-end or holiday deals – CNBC

December 23, 2021 by No Comments

Dealer inventory levels across the country remain extremely low due to a semiconductor chip shortage that has led to sporadic plant shutdowns and depleted vehicle inventories in 2021.

Michael Wayland / CNBC

DETROIT – The Christmas wreaths and lights are hung at a General Motors dealership in metro Detroit, but there’s not too much else festive happening at this lot and others like it across the nation this holiday season.

Instead of new car buyers flocking to dealer lots to take advantage of holiday and year-end deals, many dealerships are nearly empty of both vehicles and customers. And if consumers do find a vehicle, they should expect to pay near sticker price, if not more, on some new cars and trucks.

J.D. Power reports about 89% of new vehicles bought by consumers sold near or above the manufacturer’s suggested retail price, also known as MSRP or sticker price. That compares with 12% in December 2019.

But it wasn’t the Grinch that stole this holiday selling season, it was the lingering impacts of a semiconductor chip shortage that wreaked havoc across the global automotive industry this year, leading to sporadic plant shutdowns and depleted vehicle inventories.

“I don’t remember a season at all like this,” said Michelle Krebs, an executive analyst at Cox Automotive who’s followed the industry for 40 years. “We’ve never seen anything like this. Typically, the issue is inventory outweighs demand, so this is a complete turn on its head.”

Dealer lots and deals, also known as incentives, both reached record lows this year due to the parts shortage and there’s still really no end in sight for 2022, according to industry analysts.

Low inventories

With about 1 million new vehicles built in 2021, there are 1.8 million fewer new vehicles available for consumers to buy this year and 2.5 million less than 2019, according to Cox Automotive. J.D. Power reports national vehicle inventories are at 850,000 vehicles this month, when retail sales are typically 1.4 million.

“We’re almost turning the entire inventory twice in any given month,” said Tyson Jominy, vice president of data and analytics at J.D. Power. “I don’t recall anything ever like this.”

At the Lithia Motors-owned Buick and GMC store in metro Detroit, a sales consultant volunteered to drive a service customer home because of the lack of new vehicle shoppers, while another sales rep complained about only having five vehicles on the lot.

“I think we’re in still in for a bumpy road ahead as far as it goes for inventory and for shopping and finding exactly what you want for the price you want,” said LMC’s president of the Americas, Jeff Schuster. “But at least for now, it doesn’t look like it’s going to get worse.”

Record or near-record pricing on new vehicles isn’t expected to change anytime soon as automakers have vowed to offer fewer incentives to lure buyers and have dealers keep less vehicles on hand.

‘It’s extremely different’

The low supplies have led to record dealer profits as consumers are willingly pay more for a new vehicle. Some dealers also are adding markups, or “market adjustments,” on high-demand products. While that’s not unprecedented, the amount and scope is more than ever before, analysts say.

“It’s extremely different than the old days,” Jominy said.

Cox Automotive reports Stellantis, formerly Fiat Chrysler, has the highest days supply of vehicles currently. Others such as luxury brands Audi, Cadillac and Infiniti …….

Source: https://www.cnbc.com/2021/12/22/looking-for-a-new-vehicle-dont-expect-any-year-end-or-holiday-deals-.html


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