Market Adjustments in New Vehicle Pricing Show Significant Changes
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Market Adjustments in New Vehicle Pricing
ZeroSum "State of the Dealer" Report Highlights Significant Trends
Recent findings indicate that average market adjustment pricing for new vehicles has more than tripled this year due to a substantial increase in vehicle inventories. According to ZeroSum's analysis, the total new vehicle inventory is approaching the significant milestone of 3 million units.
Inventory Growth Analysis
As of the latest report, available new vehicles surged from approximately 1.96 million units a year ago to 2.95 million units. This increase in inventory represents a growth of over 50 percent year-over-year. In contrast, the market adjustment price has changed dramatically, from -$532 in August of last year to -$1,836 in the same period this year, indicating a notable shift in market dynamics.
Market Dynamics and Vehicle Movement
Despite vehicle movement reaching a peak of 1.2 million units in a 12-month period this August, the growth has not met the rising inventory levels. While vehicle movement increased significantly from 1.03 million units last year (a 16 percent jump), it remains evident that dealers are facing pressure due to a growing surplus of vehicles.
Dealer Strategies Amid Inventory Pressure
In light of these market changes, dealers are feeling the heat, prompting them to use more aggressive incentives to facilitate sales. Jeff Englishmen, an industry expert, emphasizes that the disparity in inventory growth relative to vehicle movement necessitates the use of discounts and adjustments to stimulate interest among consumers.
Future Predictions for Vehicle Movement
Looking ahead to September, ZeroSum predicts that vehicle movement may slightly decline to around 1.18 million units. The anticipation points to a steady inventory level near the 3 million mark, further indicating that dealerships will continue relying on incentives to drive sales.
Used and Certified Vehicle Trends
Encouraging trends are surfacing in the used and certified vehicle markets, which shows signs of improving health metrics. Used vehicle turn rates rose from 69 percent in August last year to 72 percent this August. Inventory for used vehicles also saw modest expansion from 1.77 million to 1.83 million over the same timeframe. Certified used vehicle turn rates, while slightly down to 83 percent, remain robust.
Pricing Trends Impacting the Market
Year-over-year pricing adjustments on used vehicles seem to be having a positive impact, with prices dropping from $28,993 in August 2023 to $26,429 in August 2024. This decline in used vehicle pricing is likely contributing to the Market Adjustment pressures being observed in new vehicle sales.
About ZeroSum
ZeroSum is recognized as a leading automotive retail agency that specializes in digital marketing solutions tailored to dealerships. The company's State of the Dealer report serves as a vital data source for trends in both new and used vehicle markets, helping stakeholders understand the ongoing shifts in consumer behavior and market dynamics.
Contact Information for Media Inquiries
For any media inquiries, please reach out to:
Mike DeVilling
Email: [email protected]
Jennifer Haun
Email: [email protected]
Frequently Asked Questions
What is market adjustment pricing?
Market adjustment pricing refers to the difference between dealer marketed prices and Manufacturer's Suggested Retail Price (MSRP), factoring in discounts and incentives.
How much has new vehicle inventory increased?
New vehicle inventory increased by over 50 percent year-over-year, rising from 1.96 million units to 2.95 million units.
What are the expectations for vehicle movement in September?
Vehicle movement is expected to slightly decline to approximately 1.18 million units in September.
How are dealers adapting to the inventory surge?
Dealers are adopting more aggressive pricing strategies and incentives to stimulate sales due to increased inventory levels.
What trends are seen in the used vehicle market?
The used vehicle market shows positive trends, with improved turn rates and a decrease in average vehicle pricing.
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