- Car shoppers can expect more discounts as cars pile up on dealer lots.
- Most brands had enough cars to last more than 75 days heading into January.
- Oversupply is good for consumers but a headache for dealers.
Holiday car deals will likely spill over into the start of 2025 as some dealers continue to struggle with over-supply.
An uptick in discounts wasn’t enough to clear some dealer lots in December. US car dealers had enough vehicles on lots or in transit to last 75 days heading into January, up more than 18% from the same month a year ago, according to data from Cox Automotive. A 60-day supply is considered the benchmark for healthy inventory.
Most brands had inventory levels above that 75-day average, with nine brands holding more than 100 days worth of cars at the end of the month, according to Cox.
This headache for dealers and car companies gives budget-conscious new-car shoppers a much-needed advantage. The supply glut will likely lead to more discounts and give shoppers more room to negotiate for a better deal on a car that has sat for too long on a dealer lot.
Vehicle affordability is a key issue for demand right now, as the average price paid for a new car inches closer to $50,000. That’s delivering some stark sticker shock for customers who spent the last few years sitting out of the market waiting for interest rates to come down.
Best brands for a deal
Stellantis brands, including Dodge, Ram, and Jeep, top the over-supply list with between 107 and 122 days' supply.
The embattled Detroit car company struggled with cratering demand last year amid higher prices. After the departure of former CEO Carlos Tavares, dealers are confident that new management will bring sticker prices back in line with customer expectations. In the meantime, discounts are likely to be prevalent.
Nissan is also near the top, with enough inventory to last about 116 days.
Nissan deals are plentiful after the car company brought back an incentive program in the fall designed to whittle down ballooning inventory. The move rustled dealers, who complain these discounts cut into their profits.
Deals for Nissan and Ram vehicles ramped up at the end of the year, with discounts accounting for 13% of the average transaction price for those brands in December, according to Cox.
At the other end of the spectrum, Toyota and its luxury Lexus brand have some of the lowest inventory levels, with less than 30 days of supply. Subaru and Kia sit around the sweet spot of 60 days of supply.
Why oversupply is such a headache for dealers
Oversupply is not new to Nissan or Stellantis dealers. Both groups have clashed with their car companies in the last few years over shrinking dealer profits and growing inventory levels.
Stellantis and Nissan brands topped the list of the least-trusted brands in the annual Kerrigan Dealer Survey.
Chrysler-Dodge-Jeep-Ram dealers posted a historically high level of distrust after publicly criticizing former CEO Carlos Tavares last year. Nissan and Infiniti scored as the second and third least-trusted franchises listed in the 2024 Kerrigan Dealer Survey.
Nearly 60% of dealers from each of Nissan's brands reported "no trust" in the company.
Do you work for a car dealership? Are you seeing the effects of over or under-supply? Reach out to this reporter at [email protected].