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Here’s Why the Supply of New Cars for Sale Remains Tight

Even though demand is up, new car dealers will have a lot of empty parking spots for the foreseeable future, reports trade publication Automotive News.

Various production shortages that began with the onset of the coronavirus pandemic and have been amplified by chronic computer chip shortages since late last year mean dealers won’t have enough cars to keep pace with demand.

General Motors, Ford, and Stellantis — the newly formed parent company of Chrysler, Jeep, Ram, and other brands — have on average around 30 percent fewer cars on lots now than they did a year ago before the pandemic began.

Early on, dealers were stuffed with unsold cars as consumers were in many cases prohibited from car shopping in person. Then, as consumers and sales bounced back in the summer, automakers struggled to refill depleted inventories because they were running shorter shifts at assembly plants, and there were numerous delays related to importing cars from outside the country.

Now, computer chip shortages have caused all major automakers to dial back production.

Inventory expected to remain tight

Many dealers don’t expect inventories of new cars to bounce back any time soon, either. The industry trade journal found that nearly a quarter of the 183 dealership executives surveyed in January fear that inventories will not keep pace with demand until at least the 2022 calendar year.

Over the past 20 years, automakers have significantly trimmed the number of car variants that dealers stock. Fewer body styles, trim levels, and individual options are available as most automakers have adopted at least a version of the simple, few-surprises packaging pioneered by Honda. This has generally made it easier for dealers to stock cars that might appeal to a consumer — fewer choices means a dealer can have a higher percentage of available versions in stock.

But automakers still need to be able to build any version of a car to sell it, and that alone is proving to be a challenge this year.

Additionally, the shortage of new cars on lots is likely to inflate used car values, at least for a while.


Andrew Ganz
Andrew Ganz
Andrew Ganz is an author specializing in helping in-market consumers get the most bang for their buck -- and the best car, while they're at it. When not virtually shopping for new and used cars, Andrew can probably be found under the hood of a vintage classic that's rapidly losing fluids.

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