The total unsold new vehicle supply in December 2021 was down 62 percent year-over-year as automakers continued to deal with the impacts of the semiconductor chip shortage.
According to Cox Automotive, the U.S. supply of unsold new vehicles stood at nearly 1.1 million units near the end of December – down nearly 1.8 million units from December 2020 and down 2.5 million from December 2019. That said, the supply improved slightly from November 2021, when the total available U.S. new vehicle supply stood at a paltry 935,100 units.
Charlie Chesbrough, Cox Automotive senior economist, said the slight improvement in new vehicle supply from November to December is a positive sign that inventory levels will begin to improve this year.
“Inventory levels have been improving modestly, and sales in December increased from November reflecting this supply improvement,” Chesbrough said. “The expectation is that this trend will continue throughout 2022 as many of the supply chain disruptions of 2021 begin to fade away.”
While supply chain issues are beginning to dissipate, Chesbrough says the highly contagious and persistent Omicron variant of the COVID-19 virus has the ability to disrupt parts and vehicle production output.
“However, the rise of the Omicron variant has the potential to disrupt production capabilities yet again, so the risks to the vehicle market, and its available supply, remain elevated,” he added.
Cox Automotive says that most auto company execs, as well as industry analysts, expect the chip supply and vehicle production “will be much improved through 2022, particularly in the second half.” That said, it may still be hard to find a large selection of new at dealer lots, as many consumers have postponed making a new car purchase as they wait for the chip shortage and pandemic to subside.
“Still, continued tight inventories are forecasted as consumer demand for vehicles, supported by postponed purchases and strong economics, stays high as the near-empty pipeline of new vehicles is refilled,” the publication observed.