Car dealers saddled with least demand, most inventory since Great Recession

March 13, 2019

The amount of time it would take new car dealers to sell off their inventories is at the highest level since the Great Recession, Automotive News reported Monday.

New-car dealers in the U.S. had more than 4 million unsold vehicles in inventory at the beginning of March, which translates to a 79-day supply. Calculated using the number of unsold cars and the previous month's demand, "days supply" is an industry term that helps automakers know how many vehicles to build or allocate to dealers. 

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The 79-day figure is the highest since March 2009, when automakers had a 101-day supply. Demand is higher today than it was a decade ago when dealers had about 2.9 million cars in inventory, but it's not keeping pace with production. The number of cars in dealer inventories increased by about 100,000 since last month.

Weather could be one factor for the rapid slowdown. February was an unusually cold and snowy month for much of the country, which may have kept shoppers out of showrooms. 

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Another factor could be the widening price gap between new and used cars. In September, a new report showed the price gap between new and used cars was at its largest in five years. Off-lease cars rolling into used-car inventories pack far more features today than they did a decade ago. The average price a buyer paid for a new car in the first quarter of 2018 was $35,000, while a used car buyer spent just $22,000.

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