New and Used Vehicle Supplies Plummet Amid Growing Demand
In the U.S., the availability of new and used vehicles is rapidly decreasing as consumers rush to buy cars and trucks ahead of potential price hikes due to tariffs. According to industry analysts and auto dealers, the days’ supply of new vehicles—an estimate based on daily retail sales—has dropped significantly from 91 days at the start of March to just 70 days in the current month. Meanwhile, the supply of used vehicles, which was already tight, has fallen by an additional four days to 39 days.
"Consumers are eager to purchase before tariffs on imports might escalate prices," stated Jonathan Smoke, chief economist at Cox Automotive, during an online briefing. This recent decline in new vehicle supply marks one of the steepest drops observed in several years. Typically, shifts in the days’ supply are around five to seven days during stable market conditions.
Sales of new vehicles are currently 22% higher than the seasonally adjusted rate from last year and have surpassed an 8% increase on a year-to-date basis, as reported by Smoke. The used car market is also thriving, with sales increasing by 7% in 2024 relative to the previous year.
While increased sales figures are promising for the automotive industry—many analysts anticipated a stable year—there are growing concerns that demand may taper off once automakers and dealers deplete their tariff-exempt inventory.
According to the auto advisory firm Telemetry, annual vehicle sales in the U.S. and Canada could plummet by up to 2 million units due to rising production costs and the accompanying price increases.
Automakers and suppliers might manage some of the cost surges, but analysts expect that many of these expenses will ultimately fall on U.S. consumers, potentially dampening sales. Ahead of the implementation of President Trump’s 25% tariffs on imported vehicles on April 3, many automakers increased their inventory of imported cars and trucks. However, some have now altered their import strategies, held vehicles at ports, or ceased imports altogether, as seen with Jaguar Land Rover.
General Motors has responded to the situation by boosting production capabilities domestically, including increasing output at a pickup truck facility in Indiana and canceling previously planned downtimes at a plant in Tennessee.
April has started off strong for dealerships, according to Ryan Rohrman, CEO of Rohrman Automotive Group based in Indiana. He indicated that the month has begun with robust activity, reflecting a combination of tariff-related purchases and improved inventory levels compared to previous years.
"Business is currently quite positive," Rohrman proclaimed, referencing his 22 franchises. "March was exceptionally good, and the momentum hasn’t slowed."
To tackle the impact of tariffs, automakers like Ford Motor Company and Stellantis, the parent company of Chrysler, are taking the opportunity to reduce inventory by providing customers with "employee pricing" discounts.
Nick Anderson, general manager at a Ford dealership in Missouri, mentioned that these unique discounts coupled with consumer anticipation of price increases due to tariffs have drawn more price-sensitive buyers to his dealership. While this increase in foot traffic is beneficial for sales, it has adversely affected the dealership’s gross profit margins.
"We’re on track to match or exceed last year’s performance," Anderson remarked. "However, most of our customers are definitely more cost-conscious. While the volume is healthy, profits have diminished due to the shift in clientele."
As optimism about sales remains, Anderson noted the importance of monitoring tariff developments in the coming months. He expressed that a lot depends on what unfolds over the next 60 to 90 days.
On a related note, President Trump mentioned on Monday that he aims to "assist some of the automotive companies," though he did not clarify what this assistance would entail.
During Stellantis’ annual meeting, Chairman John Elkann expressed optimism regarding Trump’s discussions about support, noting that the 25% tariffs on imports and stringent European emissions regulations pose substantial risks to both auto markets.
