Changes in New Vehicle Pricing
ZeroSum "State of the Dealer" Report Highlights Key Trends
Recent reports show that the average market adjustment pricing for new vehicles has surged more than threefold this year, largely due to a significant rise in vehicle inventories. According to ZeroSum's analysis, the total inventory of new vehicles is nearing the important benchmark of 3 million units.
Analysis of Inventory Growth
The latest report reveals that the number of available new vehicles has jumped from approximately 1.96 million units last year to 2.95 million units today. This represents a remarkable growth of over 50 percent compared to the same time last year. In contrast, the market adjustment price has shifted dramatically, moving from -$532 in August of last year to -$1,836 during the same month this year, highlighting a significant change in market conditions.
Understanding Market Dynamics and Vehicle Sales
Although vehicle sales reached a peak of 1.2 million units over the past 12 months this August, this increase has not kept pace with the growing inventory levels. Vehicle sales rose substantially from 1.03 million units last year, marking a 16 percent increase. However, it is clear that dealers are under pressure due to an oversupply of vehicles.
Dealer Strategies in Response to Inventory Challenges
With these market changes, dealers are feeling the pressure and are resorting to more aggressive incentives to boost sales. Industry expert Jeff Englishmen points out that the mismatch between inventory growth and vehicle sales requires dealers to offer discounts and adjustments to capture consumer interest.
Forecast for Future Vehicle Sales
Looking ahead to September, ZeroSum anticipates a slight dip in vehicle sales to about 1.18 million units. This forecast suggests that inventory levels will stabilize near the 3 million mark, indicating that dealerships will likely continue to rely on incentives to promote sales.
Trends in Used and Certified Vehicles
Positive trends are emerging in the used and certified vehicle markets, indicating improved health metrics. The turn rates for used vehicles increased from 69 percent in August last year to 72 percent this August. Additionally, the inventory of used vehicles saw a modest rise from 1.77 million to 1.83 million during the same period. Although certified used vehicle turn rates dipped slightly to 83 percent, they remain strong.
Impact of Pricing Trends on the Market
Year-over-year pricing adjustments for used vehicles appear to be beneficial, with prices decreasing from $28,993 in August 2023 to $26,429 in August 2024. This decline in used vehicle prices is likely contributing to the pressures seen in new vehicle market adjustments.
About ZeroSum
ZeroSum is a prominent automotive retail agency that specializes in providing digital marketing solutions tailored for dealerships. The company's "State of the Dealer" report serves as a crucial resource for understanding trends in both new and used vehicle markets, assisting stakeholders in navigating the ongoing changes in consumer behavior and market dynamics.
Media Contact Information
If you have any media inquiries, please contact:
Mike DeVilling
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Jennifer Haun
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Frequently Asked Questions
What is market adjustment pricing?
Market adjustment pricing refers to the difference between the prices set by dealers and the Manufacturer's Suggested Retail Price (MSRP), taking into account any discounts and incentives offered.
How much has new vehicle inventory increased?
New vehicle inventory has 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 anticipated to slightly decline to around 1.18 million units in September.
How are dealers adapting to the inventory surge?
Dealers are implementing more aggressive pricing strategies and incentives to encourage sales in response to the increased inventory levels.
What trends are observed in the used vehicle market?
The used vehicle market is showing positive trends, with improved turn rates and a decrease in average vehicle pricing.
