The inventory shortage has dragged on for more than two years now, but for shoppers playing the waiting game, it might feel more like two decades. First, supply chain and labor constraints early in the pandemic forced automakers to cut new-vehicle production; then the global microchip shortage further exacerbated the situation. Demand quickly outpaced supply, creating a “new normal” of empty dealer lots and escalating new-car prices. Shoppers who were sidelined by these conditions may finally get their shot at a new car in 2023 as inventory starts to improve — but what about the record-high prices?
Related: How Long Will the Vehicle Inventory Shortage Last?
The easing of the microchip shortage is responsible for the production and inventory improvements seen in recent months, says Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions. If this trend continues, lower prices may follow thanks to reduced markups:
“The worst of the microchip shortage should be behind the automotive industry,” wrote Fiorani in an email to Cars.com. “Better access to chips, and other components, will help manufacturers increase output of vehicles while the idea of a looming recession is slowing demand.”
“Limited access to chips pushed manufacturers to focus on higher-profit models at the cost of entry-level models, skewing the average price higher,” he added. “Consistent demand for new vehicles and a limited supply of product allowed dealers to sell at or above MSRP … With more supply and potentially less demand, prices in 2023 should begin to slip.”
Inventory Goes on the Rebound
J.D. Power data show improved production and a rise in inventory levels. According to Tyson Jominy, J.D. Power’s vice president of data and analytics, shoppers will soon reap the benefits.
“Production has been improving,” wrote Jominy in an email to Cars.com. “The industry just capped off its third straight month of deliveries to retailers over 1 million, so [it’s] not much of a surprise that inventory also topped 1 million for three straight months … As a result, consumers will start to see more vehicles on dealer lots and far less asphalt than they saw during peak summer shopping months.”
Cars.com data show new-car inventory is tracking with this trend. There were approximately 1.4 million new vehicles among Cars.com dealers in November — up 31% compared to May 2022 and 40% higher than November 2021. Although it’s a promising sign, inventory remains well below the levels seen prior to the shortage in 2019: New-car inventory approached 3.2 million that November; two years later, it’s still down 57%.
More Time on the Lot
Another sign that inventory is improving is that the average new vehicle is now spending more time at the dealership before being sold. According to J.D. Power’s December sales forecast, an estimated 47% of vehicles will be sold within 10 days of arriving at a dealership in December — down from a record 57% in March. Meanwhile, a new vehicle is in a dealer’s possession for an average of 23 days — up from 18 days the same time a year prior. Among Cars.com dealers, the average number of days a vehicle spends on the lot has climbed from 39 days in November 2021 to 44 days the same month a year later.
Although vehicle availability is still largely dependent on the model and vehicle type, shoppers should find it easier to get their hands on some of the most popular nameplates compared to the same time in 2021. The following are inventory levels among Cars.com dealers for vehicles that make Automotive News’ most recent list of the top best-selling models.