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    Home»Business»Looking for a new vehicle? Don’t expect many, if any, year-end or holiday deals
    Business

    Looking for a new vehicle? Don’t expect many, if any, year-end or holiday deals

    December 22, 2021No Comments4 Mins Read
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    In this article

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    Dealer inventory levels across the country remain extremely low due to a semiconductor chip shortage that has led to sporadic plant shutdowns and depleted vehicle inventories in 2021.
    Michael Wayland / CNBC

    DETROIT – The Christmas wreaths and lights are hung at a General Motors dealership in metro Detroit, but there’s not too much else festive happening at this lot and others like it across the nation this holiday season.

    Instead of new car buyers flocking to dealer lots to take advantage of holiday and year-end deals, many dealerships are nearly empty of both vehicles and customers. And if consumers do find a vehicle, they should expect to pay near sticker price, if not more, on some new cars and trucks.

    J.D. Power reports about 89% of new vehicles bought by consumers sold near or above the manufacturer’s suggested retail price, also known as MSRP or sticker price. That compares with 12% in December 2019.

    But it wasn’t the Grinch that stole this holiday selling season, it was the lingering impacts of a semiconductor chip shortage that wreaked havoc across the global automotive industry this year, leading to sporadic plant shutdowns and depleted vehicle inventories.

    “I don’t remember a season at all like this,” said Michelle Krebs, an executive analyst at Cox Automotive who’s followed the industry for 40 years. “We’ve never seen anything like this. Typically, the issue is inventory outweighs demand, so this is a complete turn on its head.”

    Dealer lots and deals, also known as incentives, both reached record lows this year due to the parts shortage and there’s still really no end in sight in 2022, according to industry analysts.

    Low inventories

    With about 1 million new vehicles built this year, there are 1.8 million fewer new vehicles available for consumers to buy this year and 2.5 million less than 2019, according to Cox Automotive. J.D.Power reports national vehicle inventories are at 850,000 vehicles this month, when retail sales are typically 1.4 million.

    “We’re almost turning the entire inventory twice in any given month,” said Tyson Jominy, J.D. Power vice president of data & analytics. “I don’t recall anything ever like this.”

    A Lithia Motors-owned Buick and GMC store in metro Detroit was recently hopping. A sales consultant volunteered to drive a service customer home, while another sales rep told a customer he had must five cars left on the lot and even more customers looking at them.

    “I think we’re in still in for a bumpy road ahead as far as it goes for inventory and for shopping and finding exactly what you want for the price you want,” said LMC president of the Americas Jeff Schuster. “But at least for now, it doesn’t look like it’s going to get worse.”

    Record or near-record pricing on new vehicles isn’t expected to change anytime soon as automakers have vowed to offer fewer incentives to lure buyers and have dealers keep less vehicles on-hand.

    ‘It’s extremely different’

    The low supplies have led to record dealer profits as consumers willingly pay more for a new vehicle. Some dealers also are adding markups, or “market adjustments,” on high-demand products. While that’s not unprecedented, the amount and scope is more than ever before, analysts say.

    “It’s extremely different than the old days,” Jominy said.

    Cox Automotive reports Stellantis, formerly Fiat Chrysler, has the highest days supply of vehicles currently. Others such as luxury brands Audi, Cadillac and Infiniti also are above the industry average.

    Among those with the least days supply of vehicle inventory are Toyota, Lexus, Land Rover, Honda and Kia, according to Cox.

    “This is not a typical holiday sell season,” said Jessica Caldwell, executive director of insights at auto insights firm Edmunds. “There isn’t really a brand that has inventory that looks like it’s in a good place.”

    Industry analysts and forecasters are mixed on their sales forecasts for 2022 due to the volatility in the market. They range from about 15.2 million vehicles to around 16 million vehicles or better, up from an estimated 15 million or so this year.

    This article was originally published by Cnbc.com. Read the original article here.
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