Automakers zero in on production cuts to curb excess inventory

New car supply reached 2.81 million vehicles in Oct., up from 2.78 million in Sept., after a brief summer spike above 3 million units. That’s a big jump from last year, when inventory sat 500,000 units lower, with an average days’ supply on dealer lots of 76 compared to today’s 80, according to Cox Auto.

• Toyota, Lexus, and Honda are keeping inventory lean, while brands like Lincoln, Dodge, and Ram have over four months of stock.

• Lower-priced models remain in short supply, limiting options for budget-focused buyers. Meanwhile, vehicles priced between $50,000 and $80,000 are plentiful, adding pressure on dealers to move these pricier models.

What’s happening:

• Stellantis aims to cap U.S. inventory at 330,000 vehicles by the end of 2024 — moving up a goal initially set for early 2025.

• Nissan has cut production of its Rogue and Frontier models by 40,000 units in the past two months and paused a $500 million EV expansion at its Mississippi plant.

• Ford is temporarily halting production of its F-150 Lightning electric trucks from Nov. 15, 2024, through Jan. 6, 2025, at its Rouge EV Center in Michigan.

• General Motors lowered its 2024 EV production goal from 300,000 to 200,000 - 250,000 units to better align with slower-than-expected growth in EV demand.

The bottom line: As the average days' supply approaches pre-pandemic norms, some automakers are leaning into production cuts instead of more incentives to avoid oversupply. In Sept., automakers spent 7.3% of the average transaction price on incentives —- still far below 2019 levels. For consumers, this means more options on the lot. But likely without the deep discounts seen in the past, as brands focus on keeping supply and demand balanced.

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