New car days' supply shoots up due to sales disruptions

A widespread cyberattack on dealership management systems provider CDK Global, in late June, has led to some abnormalities in last month’s inventory data.

Extreme weather and power outages may have also impacted sales and inventory, especially in Houston, Texas, one of the nation's largest auto markets. 

Driving the news: At the start of July, the total supply of available unsold new vehicles was 2.91 million units – a meaningful increase of over 1 million units from the previous year and up 52%, according to Cox Automotive. Yet, inventory was slightly down from 2.93 million units at the beginning of June, when the average new car days' supply was 81.

The intrigue: Although, month-over-month, inventory dropped by 200,000 units, the average day’s supply at the beginning of July was up 110% to 116 days. This is not typical for the industry at all and is one of the highest levels recorded, after April 2020.

Of note: Toyota, Lexus, and Honda continue to have some of the lowest days’ supply, while Stellantis brands are on the high end.

Due to the disruption, sales noticeably dropped after mid-June and continued into early July. Cox Automotive’s 30-day new-vehicle sales trend fell by 30% month-over-month during this period. This explains why inventory, measured by days’ supply, was so high at the beginning of July.

Bottom line: Software outages and severe weather were two unexpected curveballs this summer making it hard to determine what’s going on accurately right now in the new car market. But trends are expected to normalize somewhat in July and August – providing a clearer picture for the rest of 2024. 

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