Dealer Supplies Hit Lowest Levels in Over 30 Years

Cash for Clunkers gave a much-needed boost to the auto industry but has left dealers with their lowest inventory levels since 1975. Still, this is not a terrible problem to have.

The number of vehicles on or being delivered to dealer lots fell to 1.4 million vehicles at the end of August. That’s 49% less than August 2008, according to WardsAuto.com.

While consumers might lose out during the month of September as dealers pull back on incentive spending and the number of model choices is limited, low inventory marks a win for auto workers. The cars and trucks on dealer lots have hit their lowest levels since 1975, and this means auto plants like Ford’s Wayne, Michigan Assembly Plant have been working overtime to churn out the top-selling Focus.

Despite low supply, demand is expected to also shrink, following the end of the federal Cash for Clunkers program and because September is normally a lower sales month than August in a typical year.

Less Supply Is Good News (Detroit Free Press)

Comments

This sounds like good news all around to me....you have autoworkers putting in over time and dealers moved a bunch of cars....this is where we want to be.

The C4C program was an artificial stimulus so what has gone up must now come down. I hope you have the same positive attitude when car sales return to being flat as this economy stinks.

In the New York market, Ford has been running TV ads for Focus that tout rebates up to $1500.

That would indicate that, at least in NY, Ford is a bit concerned with sales of that model.

Many of the people who took advantage of Cash for Clunkers, I imagine, were mostly people who do not buy new cars very often. If this is true, then Cash for Clunkers created new customers for the market, rather than evoking car purchases by people who would be buying a new car at some point anyway.

One factor contributing to the low inventory: furloughs at many US auto plants. However, as this article states, buoyed by artificial sales numbers and a demanding autoworkers union, many of those plants are back up and running. Crankin out the hits. But without an improved economy, market-based demand will remain low, and inventories will stack up again. And that is not so good.

Easy come, easy go, easy come back again. Let's be honest: inventories are going to go back through the roof once they start cranking them out again.

However, with the stock market coming back a bit, it might be reasonable to think sales of vehicles might go back up. At least for luxury cars.

Unfortunately, the market for regular cars - you know, the ones that need to be financed, will probably continue to suffer due to still-tight credit.

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From my opinion,its a big problem that from compare to last year,in this year ,the numbers of vehicles delivered to dealer is up to 49%.