Automakers have sent retailers enough new vehicles to restore a 30-day supply to three major publicly traded auto groups, based on first-quarter earnings reports.
“New-car inventory is building,” Sonic Automotive Inc. President Jeff Dyke said on the company’s first-quarter earnings call on Thursday, April 27.
One auto group saw the time for increased incentive spending drawing near, while another reported discounting well-stocked vehicles below sticker.
However, some brands remain severely tight on inventory, according to public group executives, with more than one company singling out Toyota as in scant supply.
“As we look to May, the asymmetrical market positions of each manufacturer could become more apparent,” Thomas King, president of J.D. Power data and analytics, said in a statement Thursday. “Brands with higher inventory levels may participate in the tradition of Memorial Day promotions and discounts to generate sales, while other brands that are still struggling with production will have to decide whether or not to compete on price.”
Lithia Motors Inc. said it had a 52-day supply of new vehicles as of March 31, up from 27 days a year earlier and up from 47 days as of Dec. 31.
Inventory availability is improving, Lithia COO Chris Holzshu said on the group’s April 19 earnings call. However, several automakers, which he did not identify, have not invested in additional consumer incentives to meet retail demand, he added.
“When you look at finance incentives, they’re still 50 percent of what they were two years ago,” Holzshu said. “And when you see that we have inventory on the ground right now — especially in the domestic lines — that is not moving, our day supply is building. And [if] you look at the fleet business, which was up 60 percent in the quarter, you start to see that there’s a timing of when incentives are definitely going to have to flow back to the consumers, which is going to help us drive more retail.”
Lithia, of Medford, Ore., ranks No. 1 on Automotive News‘ list of the top 150 dealership groups based in the U.S., with retail sales of 271,596 new vehicles in 2022. Lithia’s sales figures include dealerships outside of the U.S.
Sonic franchised dealerships carried a 31-day supply of new-vehicle inventory in the first quarter, including vehicles in transit, up from a 15-day supply a year earlier. Sonic had a 24-day supply in the fourth quarter.
Dyke said new-vehicle inventory has gone from around a 20-day supply to a 30-day supply on average for Sonic and other retailers.
“We expect that to continue to grow,” he said. Automakers will not keep supply in the 25- to 30-day range, he added, but closer to 40 days.
Sonic, of Charlotte, N.C., ranks No. 6 on Automotive News’ list of the top 150 dealership groups based in the U.S., with sales of 101,168 new vehicles in 2022.
Asbury Automotive Group Inc. saw 30 days of new-vehicle inventory in the first quarter, up from a 10-day supply a year earlier and slightly more than the 26 days it had at the end of the fourth quarter.
However, Asbury remains extremely short of vehicles for some brands, CEO David Hult said on the group’s Tuesday, April 25, earnings call. Dan Clara, Asbury operations senior vice president, said it had a 63-day supply of domestic vehicles but only 18 days for imports.
Asbury’s days’ supply of Toyota, its No. 1 brand, remained in the single digits for the entire first quarter. “The hot models, we didn’t really have much inventory at all,” Hult said.
The group also carried a single-digit days’ supply of Honda vehicles through most of the first quarter, though that rose to the “mid-teens” near the end, Hult said.
“So the demand was there, and the volume was there to do more,” he said, “we think at a healthy margin.”
On the other hand, Asbury had more than a 60-day supply of vehicles from Stellantis, its No. 2 brand, Hult said. Stellantis sales were hindered by “heavily contented trucks,” incentives still “catching up” and stop-sale orders, he added.
Asbury sold vehicles with single-digit days’ supply at sticker price, Hult said, while those “north of a 40-day supply” were discounted.
Asbury, of Duluth, Ga., ranks No. 5 on Automotive News‘ list of the top 150 dealership groups based in the U.S., with sales of 151,179 new vehicles in 2022.
Group 1 Automotive Inc. recorded a 27-day new-vehicle inventory supply in the first quarter, compared with 21 days at the end of 2022 and just nine days as of March 31, 2022.
“Inventory is a bit higher in our domestic brands [though] import brands remained fairly constrained,” CEO Daryl Kenningham said on Group 1’s earnings call on Wednesday, April 26.
Toyota and Lexus, which encompass roughly 27 percent of Group 1’s U.S. business, remain “very tight,” at a combined five-day supply, Kenningham said.
Group 1, of Houston, ranks No. 4 on Automotive News‘ list of the top 150 dealership groups based in the U.S., with sales of 154,714 new vehicles in 2022.
AutoNation Inc. has seen similar conditional improvements. For the first quarter, the company reported a 25-day supply of new-vehicle inventory vs. eight days for the same period in 2022 and 19 days in the fourth quarter of 2022.
Industry inventory for new vehicles remains well below historical levels due in part to an uneven production recovery, CEO Mike Manley said on AutoNation’s first-quarter earnings call on April 20.
“There is a wide variation amongst brands and models” across domestic and high-end vehicles, he said.
Higher price points will adjust as post-pandemic supply chains and vehicle production continues to normalize, Manley said.
“Our expectation is that as more inventory comes into the marketplace and we continue to see higher monthly payments, it will continue … to mitigate throughout the year,” he added.
AutoNation, of Fort Lauderdale, Fla., ranks No. 2 on Automotive News‘ list of the top 150 dealership groups based in the U.S., with sales of 229,971 new vehicles in 2022.
Penske Automotive Group Inc. had 22 days of new-vehicle supply in the U.S. at the end of the first quarter, up from 18 days at the end of December and nine days in the first quarter of 2022.
“Our days’ supply, when you look at it, is very, very low,” CEO Roger Penske said on an earnings call on Wednesday, April 26. Supply of its No. 1 brand, BMW, stood at 14 days, Penske said, while the group had a “single-digit” supply of Toyota vehicles.
The Detroit 3 appear to have more availability, Penske added, “which is probably driving some of these dealers starting to discount.”
But the group’s portfolio is almost entirely comprised of foreign brands. Penske CFO Shelley Hulgrave told Automotive News its inventory is “40 to 50 percent presold” in the U.S.
“I don’t think you’re going to see a lot of incentives with those kinds of presales,” Hulgrave said.
The company expects to maintain that presale rate, Executive Vice President Tony Pordon said.
“Demand remains strong,” he said. “We’re seeing inventory come in. It’s higher than it was, but we’re turning it very quickly.”
Penske, of Bloomfield Hills, Mich., ranks No. 3 on Automotive News‘ list of the top 150 dealership groups based in the U.S., with sales of 185,831 new vehicles in 2022.
Mark Hollmer, Gail Kachadourian Howe and Jack Walsworth contributed to this report.