America’s Big Three Automakers and the United Auto Workers union are negotiating furiously, trying to head off a possible strike late next week. A strike could halt production of many cars. If it drags on long enough, dealers could sell much of their existing inventory, and a shortage of new vehicles could cause prices to rise.
But car dealers have prepared well for a work stoppage. Kelley Blue Book parent company Cox Automotive reports that the total U.S. supply of available unsold new vehicles climbed above 2 million units in early September – a level not seen since April 2021.
How Dealers Count Cars
Car dealers measure their supply of new cars for sale in a metric they call “days of inventory” – roughly, how long it would take to sell out of new cars at today’s sales pace if they couldn’t acquire more. It’s mostly a theoretical number. But, with a strike looming, some dealers could soon find themselves unable to acquire more.
An old industry rule of thumb tells dealers to keep a 60-day supply on hand. Veteran dealers tend to find that a 60-day supply means your local sales lot likely has a model with the combination of color and features that would appeal to you in easy reach.
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Supply Much Higher Than a Year Ago
Nationwide, dealers currently average a 58-day supply. That’s lower than they’d probably like. But it’s 46% higher than this time a year ago.
Domestic Automakers Stockpiling
A strike would affect only domestic automakers. Many foreign automakers have factories in the U.S., but their workers are not unionized and unable to strike.
The Big Three have been preparing.
Just two domestic brands had supplies below the industry average as September began.
Cadillac had the lowest inventory of all domestic brands, with a days’ supply of 46. Chevrolet had just 52. The newly-remodeled Chevrolet Trax is in extremely short supply at 21 days.
Some analysts believe the UAW may choose to strike Stellantis as a symbol rather than all three domestic automakers at once. That would allow the union’s strike fund, which pays striking workers, to hold out longer.
Stellantis has prepared accordingly. Its Dodge brand has the most at 136 days’ supply, followed by Chrysler at 125. Ram has 115 days’ supply. Jeep is at 95 days’ supply.
Full-Size Truck Supply Is High
The Big Three rely heavily on full-size truck sales to support their profits. They have stockpiled trucks to prepare for a worker walkout. The Ram 1500 has a 107-day supply, followed by the Ford F-150 at 98 days’ supply. The Chevrolet Silverado and GMC Sierra had a supply of 81 and 79 days, respectively.
Other domestic bestsellers with hefty supply are the Ford Escape and Bronco Sport, the Jeep Grand Cherokee, and the Chevrolet Equinox.
Foreign Makes Have Lower Supply But No Strike Risk
Foreign automakers haven’t needed to prepare for a strike and are behaving accordingly. Honda, Toyota, and Kia have around 30 days’ supply. Subaru and Lexus were at the low end as well.
The higher the price, the heftier the inventory. The $60,000 to $80,000 segment had the most with 77 days’ supply, followed closely by the $50,000 to $60,000 category at 74 days’ supply.
In contrast, the under $20,000 segment had just 21 days’ supply, followed by the $20,000 to $30,000 category with 35 days’ supply. That reflects a broader trend: automakers have focused on building cars for wealthier, better-credit buyers and trimmed inexpensive models from their lineups.
EV Supply High, and Not Uniform
The electric vehicle (EV) supply situation is changing quickly.
The supply of unsold EVs at the start of September was modestly lower than at the beginning of August, at 98 days’ supply, and remains well above the industry average. EV sales in the past 30 days increased slightly (7%), and available inventory decreased, reducing days’ supply.
But that inventory may be concentrated in a few states. EV sales are growing in some states while shrinking in others.
As with the broader industry, EV inventory varies significantly across brands and products. The affordable Chevy Bolt – among the bestselling non-Tesla EVs – has less than 30 days’ supply, the tightest among volume EVs. The popular new Cadillac Lyriq and BMW i4 inventories are also well below the industry average. Hyundai, Subaru, Toyota, and Volkswagen dealers hold EV inventory between 80 and 100 days, about average for EVs.
EVs with the highest inventory, as measured by days’ supply, are primarily high-end, German-made luxury EVs, all with listing prices well above $100,000. However, Nissan dealers are also carrying above-average levels of EVs.
