The COVID-19 pandemic has had a dramatic effect on vehicle production, with widespread factory shutdowns putting a serious constraint on dealer inventories. That includes General Motors, which is reported to have a 49-day supply of vehicles in the U.S., down from the 73-day supply recorded a year prior.
Those are the figures reported by Automotive News, citing estimates from Morgan Stanley. Meanwhile, GM’s crosstown rival, Ford Motor Co., shows a 70-day supply, down from 107 days, while Stellantis dropped to 70 days from 96 days.
These figures stand in stark contrast to years prior. Back in 2005, General Motors had almost 1.2 million vehicles on dealer lots. Now, available inventory is down to a third of that, with popular items, such as GM’s full-size trucks and SUVs, sometimes selling even before they are delivered.
According to an Automotive News survey, more than half of dealers surveyed tie the low inventory to increased profit margins for new and used vehicles, with roughly 40 percent of dealers surveyed saying that those profits could disappear if inventories return to levels prior to the pandemic.
“Low inventory may just be the new normal,” said senior marketing manager, Chevrolet SUVs, Brad Franz, in an interview with GM Authority Executive Editor, Alex Luft.
Late last year, we spoke with Franz regarding General Motors inventory for popular crossovers like the new Chevy Blazer and Chevy Trailblazer.
“When we’re selling at the rate that we’re selling them, inventory is tight. So the build-up is challenging. We are starting to rebound, but [inventory] is tight. We are selling them as fast as we get them on dealer lots, Trailblazer in particular,” Franz told GM Authority.
As GM Authority covered previously, the 2021 Chevy Trailblazer is exceeding expectations, turning in just 36 days on average.
“We will just have to live in an environment where we get a little more comfortable running lean,” Franz added. “We’re definitely a little leaner than we want to be, but we still believe we have the inventory on the ground to hit our objective.”
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Comments
I do not see the problem. In Europe there are not mega lots full of many new vehicles. One tends to have to wait for a new vehicle whether they are buying or leasing it. Americans just need to be a little more patient.
The American market has been geared for instant gratification for so long and it won’t change overnight. The consumer has the power of the internet, they can find what they want, and go get it. At this point, manufacturers are picking winners and losers. Inventory is going to major metro markets, and smaller markets are suffering. The pain is not being distributed equally. Some manufacturers are not currently accepting sold orders and that’s messed up.
Japanese, and now Korean, cars have a far smaller market share in Europe than in the US. Those cars normally take 2 months just to come over by boat. Shipping from Europe is about a month too. That’s why they need to maintain larger inventories, which then trickles down to domestic competition.
Driving prices higher as well. Lot more vehicles selling near MSRP. Good for dealers and makers not for the consumer. Is it a bubble if you buy now and inventory jumps post COVID?
Hey, at least they wont have to be discounting so much to move things, ha, ha, ha.
I don’t think (cough) they’re going to keep inventory low just to increase margin, but I wouldn’t be surprised.
I think people won’t be replacing their vehicle as often. Americans see, and then have to “have”. If there is nothing to look at, then why would they buy? Americans do not wait for things anymore! They will just move over to the Ford lot that has more vehicles to look at. Low inventory will kill GM!
MK Barrett
Here in the USA if its not in stock we order it from Amazon.
Sign up for Amazon Prime and they may even wave Destination Fees.
good zinger pg
Low inventories mean less production when manufacturing is geared up for a higher inventory.
Back in the ’70s and ’80s and 90s, I used to always order a new auto in February or March and about 6 weeks later the salesman would call me and say your car has arrived, just in time for Spring. Although I was a GM employee, I got my price mail to me from GM, no haggling with the dealership over the price. Back then the discount was about 25% off MSRP and the state sales tax was only 4%. You could drive your car for 3 years and get 70% of your payment back. The state sales tax is what stopping this procedure now, the sales tax is just too high on big-ticket items like autos. I think there should be a cap on sales tax on big-ticket items, this will help keep the economy going.
Low inventory will translate into lost marketshare. Brand loyalty is not what it used to be.
You can still do that with pickups and SUV. Not cars or crossover. You have to shop for best deal and sell the used one yourself. My 2015 pickup with 71k miles is sitting at 70% private sell value. Sold my last 2500 diesel for 70% after 8 years and 115k.
If you have p/u in good shape that you do not have to replace immediately sell it and in 6-9 months the good deals on new ones will be back and you will be ahead in the game
Steel is in “short” supply right now 12-18 weeks wait time for manufacturers need sheet rolls. Shortages…
Should have kept the Oshawa Assembly Plant up and running , as it is now GM has lost out on approx 1 yrs worth of production & profits from the Oshawa operations . I still scratch my head trying to figure out why they closed a perfectly good truck plant , I mean surly someone must have realized truck sales would require additional production capacity other then what was available at the time , and I don’t mean adding a shift here and there or to add OT on Saturdays and Sundays ! But that’s just me.
2019 GM had a strike and eventually inventories decreased, making it hard to purchase what you wanted. 2020 it was COVID-19 which put a halt to production and inventories decreased again. 2021 dealers are told to sell through the pipe line and not knowing what is being shipped and when. Purchasing is still a problem and dealer inventories are down. I am waiting for the 2022 models and maybe just maybe we will be able to visit a FULL dealer’s lot and pick the the vehicle we want.
What happened to the rail system in the USA? Vehicles are sitting, built, at the railhead for almost two months. It’s hard to sell something in bound when you have no clue on the arrival date. ETA means nothing anymore. Everything seems to be screwed up from the beginning to the end. Nothing about automobile manufacturing is new. What happened???
I know it was the same way 3 years ago I suspect all the imports from mexico are overloading the rails.
Here do I finally get the answer to the question which I had posed over and over on this blog:
In USA most cars are baught out of the stock kept at a dealers premises.
Here in Germany, most cars are ordered with bespoke configurations, and the buyer will have to wait, for some models several months or more than a year.
That’s why the online configurators are so important.
2019 UAW Strike, 2020 Covid-19, and 2021 Microchip component shortages. Inventories will rebound, but only when Covid-19 and its variants are controlled.
Really good blog,thank so much for your time in writing the posts.