Stellantis Weak Sales: Unsold Cars Make Biggest Inventory Since Pandemic

Feb 20, 2024 05:57 AM EST

BLACK DODGE RAM PICKUP — (Photo : PEXELS/ALBA Cars)

A buildup of cars is piling up at dealerships across the country because, for the first time since June 2020, there's an 80-day inventory of new vehicles in the automotive sector. This comes after sluggish sales in January and the return to normalcy in supply chains.

Cars Filling Up: Weak Sales

As per CarScoops, the days' supply metric, utilized by analysts to assess the automotive market's health, measures the quantity of vehicles available at dealerships and in transit from factories. Despite complications from the pandemic's aftermath, where vehicle supply was severely impacted, a higher number of days' supply typically indicates weaker demand for new vehicles.

Recent data from Cox Auto reveals a concerning trend for dealers, as the average days' supply at the beginning of January reached 80, marking a 38% increase from the previous year. This level hasn't been seen since the early days of the pandemic, specifically June 2020, when the industry experienced an 83-day supply, preceding disruptions caused by chip shortages.

CarScoops further reported dealers are likely to find solace in the fact that there were more vehicles accessible for sale in the initial month of 2024 compared to the same period in 2023. Despite approximately 2.61 million unsold new vehicles across the nation at the beginning of February, which is roughly 50 percent or 870,000 units more than the previous year, sales also experienced a 9 percent increase compared to the preceding year.

Trimming Inventories

Wards Auto revealed Jeff Kommor, the head of U.S. sales at Stellantis, has assured its U.S. dealers that the company intends to decrease its inventory by one-third through offering incentives and adjusting the prices of several high-volume models. After discussions with dealers at the recent National Automobile Dealers Association Show, Kommor expressed their commitment to reducing the inventory by at least one-third, affirming their dedication to the initiative.

Stellantis aligns with an industry-wide shift towards increased inventory levels, signaling a departure from the new-vehicle scarcity experienced over the past three years. Across the industry, inventory has sufficiently rebounded, leading to a decline in transaction prices, albeit the average monthly price remains elevated due to high interest rates.

Kevin Farrish, chair of the Stellantis dealer council, expresses dealers' contentment with Stellantis' efforts to reduce prices and stimulate sales. He informs WardsAuto that it was indeed a topic they had planned to address. When inventory begins to age, it's crucial to sell some off.

They acknowledge the dedication and eagerly anticipate the implementation of the different programs. Farrish, who presides over Farrish of Fairfax, comprising a Chrysler-Dodge-Jeep-Ram store and a Subaru dealership in Fairfax, VA, remarked on the matter.

Cox Automotive reports that in December, the Chrysler and Dodge brands had at least twice the industry average days' supply of 70 days. Jeep and Ram were also well above average. The days' supply is an estimate of how long a certain inventory would last at the current sales rate if not refilled.
According to Kommor, Stellantis is already implementing pricing strategies to increase sales. He said models that account for the great majority of Jeep's volume will experience product repositioning and pricing changes.

Kommor explains that a deliberate aspect of the Stellantis inventory increase was intentional.