CLOUD THEORY "ON THE HORIZON" REPORT: NEW VEHICLE INVENTORY PASSES 3 MILLION MILESTONE FOR THE FIRST TIME IN MORE THAN FOUR YEARS

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Oct 04, 2024, 09:00 ET

New Vehicle Movement Projected to Hit a 12-Month High in October

GRAND RAPIDS, Mich., Oct. 4, 2024 /PRNewswire/ -- For the first time since the earliest days of the Covid-19 pandemic, new vehicle inventory has surpassed 3 million according to Cloud Theory's latest "On The Horizon" market report, a comprehensive review of inventory, pricing, and vehicle movement in the auto industry.

The last time new vehicle supply exceeded this milestone was in April 2020, before the pandemic and its supply-chain-challenged aftermath significantly and persistently disrupted production and delivery of vehicles. Relatedly, new vehicle movement is forecast to hit a 12-month high of 1.18 million units in October, although the rate of growth is not keeping pace with the increases in supply.

With this rise in inventory, OEMs and dealers are being more aggressive in marketing their incentives and price reductions, which have more than tripled from year ago levels. It is noted that current Market Adjustment levels are still 20% below pre-pandemic levels.

"Hitting the three million mark on inventory is a tangible and symbolic milestone, signifying how far the auto industry has come in recovering from the Covid pandemic and its aftermath," said Rick Wainschel, VP Data Science & Analytics for Cloud Theory. "While we aren't there yet, OEMs should be vigilant to balance supply with demand and avoid the hyper-aggressive discounts that were needed to sell vehicles in the past."

With inventory and Market Adjustments both rising, it becomes more important than ever for OEMs to focus on supporting the vehicles that most need help in generating demand. Cloud Theory's Inventory Efficiency Index, which measures whether a make or model is getting its fair market share given its relative inventory position in the marketplace, identifies models and markets that need to be prioritized in terms of marketing and incentive spending. Makes that score highly on this metric can be more focused on their demand generation strategies.

When looking at this through the lens of in-stock vehicles—those that are currently on dealer lots—Lexus and Toyota, with scores of 271.4 and 267.6, respectively, rise above all other makes. But other makes such as Mazda and Audi enter the top 10 and join other leading brands (Subaru, Honda, Acura, Chevrolet, Kia, and GMC) in moving their on-the-ground vehicles efficiently.

"Incentive programs are aimed at moving vehicles that are available to purchase in the short term, so brands with high in-stock Inventory Efficiency Index scores have the luxury to allocate funds to the models and geographies that need the help and reallocate from ones that don't," said Ron Boe, Chief Revenue Officer for Cloud Theory.

Cloud Theory's patent-pending Inventory Efficiency Index (IEI) provides a real-time view of market-relevant automotive supply and demand of all makes and models and across all geographies. Key decision-makers can use the IEI to confidently allocate valuable marketing and incentive dollars to models or geographies requiring a boost in demand, or to redistribute vehicles to locations that are moving inventory more efficiently. Cloud Theory's Inventory Efficiency Index assigns scores to vehicle makes and models based on current active inventory and sales data relative to competitors.

A score of 100 means that an OEM's demand is balanced with its relative supply in the marketplace.
A score above 100 indicates that a make or model is selling its inventory more efficiently than average.
A score below 100 means that there are opportunities to bring demand into better alignment with supply (or vice versa).

In other findings, vehicle inventory has jumped by nearly 50 percent year-over-year (1.96 million units in August 2023 to 2.95 million units in August 2024), but has plateaued at just under 3 million units after hitting 2.95 million units in August, 2.93 million units in July, and 2.94 million units in June.

About Cloud Theory   
Cloud Theory is more than a concept. It is the eye of the storm, where cutting-edge data, software, and artificial intelligence meet deep industry knowledge and experience. Built for automotive manufacturers, agencies, and affiliates, Cloud Theory enables our customers to understand – in real time – the complex competitive world in which they do business and to make bold decisions that drive them forward. The combination of billions of data points, interactive tools, and expert consulting gives our clients the ability to weather any storm and find their way to clear blue skies. Learn more at cloudtheory.ai. To learn more about our entire portfolio of automotive brands, visit www.advancelocalautomotive.com.

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SOURCE Cloud Theory