Please ensure Javascript is enabled for purposes of website accessibility
More New Cars in Fresno Dealer Lots Driving Better Deals
gvw_edward_smith
By Edward Smith
Published 4 months ago on
December 27, 2023

Share

After microchip shortages, shipping disruptions, and labor strikes, the auto industry has revved up inventories. For customers that means something many haven’t seen in years — sales discounts.

Industry guidelines aim for 60 days’ worth of cars, according to Kelley Blue Book. Dealers averaged 71 days’ worth of supply in November. “Days of inventory” is how long it would take a dealer to sell its current stock.

“Our inventory is building up,” said Brett Hedrick, general manager of Hedrick’s Chevrolet. “So it, you know, it’s going to be good for the consumer because the choices are going to be so much better.”

Return of Markdowns

Beyond available choices, auto dealers have the inventory to begin discounting cars again.

Throughout the pandemic, demand was so high and availability so low that dealers needn’t significantly mark down vehicles, Hedrick said.

“There weren’t that many vehicles out there,” Hedrick said. “People weren’t trading in, people weren’t buying new ones. Prices went up because certain vehicles you couldn’t get.”

Now things have changed.

November marked the first time in the last decade that auto prices dropped year-over-year for three months straight, according to Kelley Blue Book.

Discounts on non-luxury cars made up 5% of the average sales price, up from 4.9% in October. While still low, the level of incentives from dealers is the highest since September 2021. For comparison, non-luxury incentive packages made up 10.5% of the average sale price in November 2019.

For the first time since the pandemic, vehicles — depending on the model — are selling below MSRP, said Tim Finegan, president of Fresno Chrysler Dodge Jeep Ram. The Manufacturer’s Suggested Retail Price is a benchmark set by automakers.

“The premium cars that you can’t get will still demand high prices,” Finegan said. “But you know, the average everyday car, you know, it’ll sell at MSRP or less.”

Inventory Depends on Brand: Manufacturers Correcting Oversupply

For a time this year, Finegan had more vehicles on the lot than he had ever had in 15 years. He has since balanced his inventory, he said.

Driving inventories up is a combination of softening consumer demand and higher production targets.

Finegan estimates sales for the year about 40% lower than usual. Higher interest rates and prices pushed consumers away.

Where they would normally sell between 80 to 110 cars a month, Finegan said they would be lucky to sell 50 in December.

While vehicle registrations show a 14.3% increase year-over-year for the 2023 year ending in September, Hedrick thinks it will end the year flat. The fourth quarter has been slow, he said.

The average number of days of inventory reached 71 in November. (Kelley Blue Book)

The stock of vehicles depends largely on the brand. The average Toyota dealer sat on only 32 days’ worth of inventory in November, compared to the average 71-day stock. Honda, Lexus, and Kia followed behind Toyota. At the other end of the spectrum, Ram and Infiniti dealers had the largest inventories with 114 and 120 days’ worth, respectively.

Jeep dealers in November had 128 days’ worth of vehicles.

Manufacturers increased production ahead of what they thought would be an extended strike by the United Auto Workers, according to KBB. Negotiators resolved labor disputes quicker than expected with fewer factory shutdowns than expected as well.

Manufacturers will likewise respond to oversupply by slowing production. Jeep’s parent company, Stellantis, announced it would cut one of three shifts at a Detroit, Michigan plant. Another Jeep plant in Toledo, Ohio, will have job cuts and lowered production.

Could Car Buyers Have a Normal 2024?

Finegan sees car sales returning to normal by the middle of 2024. With production balancing and the Federal Reserve signaling lower interest rates, customers can expect cheaper loans.

High interest rates not only affected the volume of sales, but the amount of money a customer would qualify for, Hedrick said.

Hedrick saw a number of customers go for mid-line or lower-line cars.

Parts availability for car repairs has also normalized. For Hedrick and Finegan, the biggest casualty of the UAW strikes was the service center. Parts for repairs were delayed anywhere from two weeks to a month.

Production is back up and parts are going out once again, both dealers said.

With the rise of electric vehicles, manufacturers are changing the way they are delivering vehicles, Hedrick said.

The old business model was to build as many vehicles as could be done, Hedrick said. The cars that couldn’t be sold would be rebated.

“It feels like what they’re doing is lowering the amount of vehicles that we have on the lot at any time and keeping more of a steady flow,” Hedrick said.

With bans on new gasoline and diesel-powered vehicles coming in 2035 in California and elsewhere, manufacturers may be looking to cap production, Hedrick said.

“I think they’re kind of figuring that out, that it’s better to be, you know, lean and agile than, you know, just flood the market and be fat with vehicles.”

RELATED TOPICS:

DON'T MISS

Surprising Ways and Places You Can Use SNAP EBT Food Benefits

DON'T MISS

Californians Worry About Crime, Setting up a Ballot Measure Showdown

DON'T MISS

The Pickle Flavor Frenzy and Its Rise in Food Trends

DON'T MISS

Kate Hudson Had a Lifetime to Make a Record. The Result is ‘Glorious,’ Out in May

DON'T MISS

Long-Lost First Model of USS Enterprise from ‘Star Trek’ Boldly Goes Home

DON'T MISS

California Leaders Take Sides in Monumental Supreme Court Case on Homelessness

DON'T MISS

Man Sets Himself on Fire Outside Trump Hush Money Trial Court

DON'T MISS

McDonald’s Ice Cream Machines Are So Unreliable They’re a Meme. They Might Also Be a Climate Solution.

DON'T MISS

Real Estate Experts Talk Fresno’s Economic Future. Are Tough Times Ahead?

DON'T MISS

Unlocking the Secrets to Fresno State’s Superb Baseball Season

UP NEXT

Californians Worry About Crime, Setting up a Ballot Measure Showdown

UP NEXT

The Pickle Flavor Frenzy and Its Rise in Food Trends

UP NEXT

Kate Hudson Had a Lifetime to Make a Record. The Result is ‘Glorious,’ Out in May

UP NEXT

Long-Lost First Model of USS Enterprise from ‘Star Trek’ Boldly Goes Home

UP NEXT

California Leaders Take Sides in Monumental Supreme Court Case on Homelessness

UP NEXT

Man Sets Himself on Fire Outside Trump Hush Money Trial Court

UP NEXT

McDonald’s Ice Cream Machines Are So Unreliable They’re a Meme. They Might Also Be a Climate Solution.

UP NEXT

Real Estate Experts Talk Fresno’s Economic Future. Are Tough Times Ahead?

UP NEXT

Unlocking the Secrets to Fresno State’s Superb Baseball Season

UP NEXT

Does Dyer Support (or Endorse) Bredefeld for Supervisor?

Edward Smith,
Multimedia Journalist
Edward Smith began reporting for GV Wire in May 2023. His reporting career began at Fresno City College, graduating with an associate degree in journalism. After leaving school he spent the next six years with The Business Journal, doing research for the publication as well as covering the restaurant industry. Soon after, he took on real estate and agriculture beats, winning multiple awards at the local, state and national level. You can contact Edward at 559-440-8372 or at Edward.Smith@gvwire.com.

Kate Hudson Had a Lifetime to Make a Record. The Result is ‘Glorious,’ Out in May

1 day ago

Long-Lost First Model of USS Enterprise from ‘Star Trek’ Boldly Goes Home

1 day ago

California Leaders Take Sides in Monumental Supreme Court Case on Homelessness

1 day ago

Man Sets Himself on Fire Outside Trump Hush Money Trial Court

2 days ago

McDonald’s Ice Cream Machines Are So Unreliable They’re a Meme. They Might Also Be a Climate Solution.

2 days ago

Real Estate Experts Talk Fresno’s Economic Future. Are Tough Times Ahead?

2 days ago

Unlocking the Secrets to Fresno State’s Superb Baseball Season

2 days ago

‘This Is How to Improve Reading Proficiency. We Just Have To Execute It’: FUSD Board President

2 days ago

Does Dyer Support (or Endorse) Bredefeld for Supervisor?

2 days ago

Get a 3D First Look at Merced’s High-Speed Rail Station Design

2 days ago

Surprising Ways and Places You Can Use SNAP EBT Food Benefits

Did you know that SNAP EBT benefits used to be called food stamps and that recipients can use those benefits to get healthy food in places o...

5 hours ago

5 hours ago

Surprising Ways and Places You Can Use SNAP EBT Food Benefits

5 hours ago

Californians Worry About Crime, Setting up a Ballot Measure Showdown

1 day ago

The Pickle Flavor Frenzy and Its Rise in Food Trends

1 day ago

Kate Hudson Had a Lifetime to Make a Record. The Result is ‘Glorious,’ Out in May

1 day ago

Long-Lost First Model of USS Enterprise from ‘Star Trek’ Boldly Goes Home

1 day ago

California Leaders Take Sides in Monumental Supreme Court Case on Homelessness

2 days ago

Man Sets Himself on Fire Outside Trump Hush Money Trial Court

2 days ago

McDonald’s Ice Cream Machines Are So Unreliable They’re a Meme. They Might Also Be a Climate Solution.

MENU

CONNECT WITH US

Search

Send this to a friend