CLOUD THEORY "ON THE HORIZON" REPORT: PRICING UNDER PRESSURE AS NEW VEHICLE INVENTORY GAINS MOMENTUM

Ford, Toyota See Increases in Supply and Demand Share

GRAND RAPIDS, Mich., Nov. 7, 2024 /PRNewswire/ -- New vehicle inventory in the marketplace hit 3.14 million units in October. It was the second consecutive month that supply counts jumped by 90,000 units (+2.9%), according to Cloud Theory's monthly "On the Horizon" report.

Although inventory has not hit the 3.3-3.5 million levels seen up until early 2020, the recent acceleration in inventory is moving in that direction.  Meanwhile, average marketed pricing for new vehicles declined, and discounts and incentives increased for the eighth straight month.

"While we aren't back to the oversupply situation that existed prior to the pandemic, we are certainly getting closer," said Rick Wainschel, VP Data Science & Analytics for Cloud Theory. "Pricing actions can mitigate sales velocity slowdowns, which appears to be the case currently. But the increasing aggressiveness on discounts and incentives may be a harbinger of other things to come."

As new vehicle supply grows, OEMs are relying more on vehicle incentives and dealers are more aggressively discounting vehicles to maintain sales velocity. Average prices being marketed to consumers declined by more than $300 in the latest month, and market adjustments off of MSRP have nearly tripled since November 2023. These actions are helping to keep turn rates steady, with a mark of 37% in October—similar to the 35-38% range seen in the last five months.

Lexus and Toyota maintained their positions as the first- and second-ranked brands in the Cloud Theory Inventory Efficiency Index. It was Lexus' third consecutive month in the top spot. Subaru took over the third spot, supplanting Honda after a market share decline for that brand.

On a month-over-month basis, several brands stand out in terms of market share and inventory share trajectories:

• Ram and BMW are growing market share despite a decline in inventory share (in other words, they are getting more efficient)
• Nissan, Chevrolet, and Honda are seeing declining market shares despite a gain in inventory share (in other words, they are getting less efficient)
• Toyota and Ford are growing on both share metrics, while Jeep is declining on both

"Some makes have inherent advantages in their Inventory Efficiency Index performance based on factors such as brand appeal, segment scope, or inventory philosophy," said Ron Boe, Chief Revenue Officer for Cloud Theory. "But those scores are not static, and moves from brands like Ram, Honda, or Ford show that change—whether for the good or the bad—is always possible."

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).

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