Important Metrics Car Retailers Need To Know About Going Into Summer 2022
Low inventory, rising wholesale prices, and persistent supply chain problems have all contributed to the industry's struggles in recent years. While many of these problems are still present, there are some changes that dealers should be aware of.
With Summer fast approaching, there are many things that are changing in the auto industry. We'll share a few things car retailers need to be aware of in order to be prepared for the coming summer season.
Inventory is up slightly, but still low
The auto industry has both good news and bad news. Inventory is still extremely low at 2.4 million units, which is a significant drop from the same time in 2020. There is some good news: there are 30,000 fewer vehicles in stock than last month with approximately 1.1 million units.
The slight increase in vehicle sales is a positive sign that the auto industry is making a slow but steady recovery. It will take some time before things get back to normal, but it is great to see inventory increase, even if only marginally.
The Wholesale Price of Used Vehicles Has risen
Prices for used vehicles continue to rise, with prices increasing by 0.7% between March 2022 and April 2022, and increasing 13% in the past twelve months. It's not surprising that the new supply chain is struggling to keep up with demand. The prices for used vehicles are rising because new vehicles are rarer than ever.
Dealerships are being forced to raise their prices because wholesale prices have become more expensive. Numerous prominent used car retailers reported losses, even CarMax, who has historically done well over the past few years. Increased wholesale prices also mean lower profit margins for resellers. This is bad news for consumers as well as retailers.
EV prices will likely fall and then go up again
There are many reasons why used electric cars have experienced a sharp rise in their prices. This is due to both rising gas prices and the scarcity of new EVs. However, it appears that EVs will continue rising in price over the next few years.
Experts have predicted that the price of EV batteries will rise by around 22% due to the imminent shortage of lithium. Consumers will feel the pinch as they will have to pay more. Dealerships may find this disappointing as potential buyers may be dissuaded from buying an EV. Considering the high cost of EVs, however, this might have less impact on sales than many are expecting.
Try Move Car
It is essential that auto industry workers have the best tools available to them in order to be prepared. Move Car is an advanced transportation management system (TMS), that allows dealers to track shipments and keep track of inventory. Get a demo today!