New car inventory dips in Aug.—bringing down days' supply

New-vehicle inventory in the U.S. saw a slight decline in August but remained firmly below 3 million units, according to data from Cox Auto.

By the numbers:

• In August, inventory was 2.91 million, down from 2.94 million in July. Days' supply is also further normalizing after CDK Global's cyberattacks.

• Compared to a year ago, inventory is up by around 914,000 vehicles, with supply rising from 57 to 72 days.

Why it matters: With inventory levels meaningfully higher than last year, manufacturers are under pressure to turn units fast, maintain market share, and meet sales targets. A simple way to do this is to add discounts, rebates, and subsidized low-interest loans.

But the incentive picture is uneven across the industry:

• Brands like Audi, Infiniti, and Nissan are raising incentives above 10% of transaction prices to entice buyers amid slow sales.

• Toyota, Porsche, and Land Rover keep incentives below the industry average (7.2% of the average transaction price).

• Stellantis brands, like Chrysler, Ram, and Jeep, have high days' supply and have had to raise their incentives.

• Yet, Dodge cut its incentives to 5.6%. This move may backfire, given that Dodge models like the Hornet still face over 300 days' supply.

Toyota's strategic restraint: The automaker dominates the fastest-selling new cars list, with nine of the top ten models, according to CarEdge. This includes the Sequoia (20 days' supply) and Lexus GX (22 days). Toyota's reliable reputation keeps demand high. So, despite low inventory and few incentives, it can maintain its pricing strategy.

Stellantis’ uphill battle: High inventory levels for models like the Dodge Hornet (323 days), Jeep Grand Wagoneer L (327 days), and Jeep Renegade (332 days) are forcing the automaker to increase incentives and address its pricing mix.

The burden on dealers: High inventory levels aren’t just a manufacturer’s problem—they create significant financial pressure for dealers, who must manage growing floorplan expenses. These costs, which dealers incur from financing unsold inventory, rise as cars sit on the lot longer. Higher incentives may help move inventory. But, they can compress dealer margins.

Bottom line: The rise in incentives is also a reaction to broader economic pressures. But there’s a fine line to walk. Higher incentives can sometimes end up being a race to the bottom on pricing.

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