When Will the Auto Industry See More Inventory?

The auto industry has been a bumpy road ever since the COVID-19 pandemic arrived in the United States in spring of 2020. And sadly, it’s not time to take your seat belt off quite yet. As we all look forward to 2022, the “Great American Car Shortage” is still going on. Many automakers were forced to shut down in 2020, and dealerships quickly followed suit or shifted gears to live video-conferencing with clients and other solutions. When dealerships reopened, consumers bought cars at a faster rate than automakers can manufacture them. Though the current global view of the auto industry might seem bleak, there are some plus sides for automotive dealerships. In fact, some dealerships are actually benefiting from the chip shortage. 

What’s Driving Low Auto Industry Inventory

Let’s check under the hood to see what issues are behind the low inventory in the auto industry. Several factors are behind the low inventory of vehicles, including high demand, COVID-related supply challenges, and the current global microchip shortage. Though the microchip shortage is the major problem facing the auto industry at the moment, it doesn’t come down to just one issue facing the automotive industry as we look to 2022.

High Demand for Both New and Used Vehicles

The pandemic produced a frenzied demand for vehicles across the country. Pickup trucks were in especially high demand in the early days of quarantine. Many buyers have stimulus money to spend and they want to use it to purchase their own mode of transportation. A car has never looked better than now for road trips and solo commutes to work.

close up of car bumper light in dealership

Global Chip Shortage

Before the auto industry could rebound from the high demand and supply issues, the chip shortage happened. The chip shortage has affected production for every major auto brand. This puts further constraints on the current inventory and drives up prices. Chips are not just used in the auto industry, but also for other electronics that became increasingly popular during the pandemic. It’s possible the chip shortage could last until 2023, according to some experts.

Other Supply Issues

Though the chip shortage gets the most attention, it’s not the only component that is in short supply for automakers. The automotive industry was hit the hardest by supply chain issues during the COVID-19 pandemic, according to at least one survey. Automakers are having trouble getting parts and materials for several reasons, including COVID-related plant shutdown of suppliers, logistical issues like shortages of ships, shipping containers, and truck drivers, and the inability to fill jobs by some suppliers.

robotic auto assembly line

New Car Inventory

The new car inventory at dealerships across the country has been hampered due to the chip shortage, high demand, and other supply chain issues. After a decline to historic lows, new car inventory is beginning to stabilize in the U.S. However, overall, inventory does remain lower than normal, and it may remain that way for some time. 

General Motors halted most of its U.S. and Mexican production of full-size pickup trucks for about a week, and Ford also slowed its North American vehicle production from July through August due to the chip shortage. 

On the bright side for dealerships, listing prices continue to climb for new vehicles. According to one recent estimate, the price paid for a new car averages $41,378. 

There’s no need to hold blowout holiday sales this year to clear your lots! Many dealers are able to sell new vehicles to clients before the vehicle arrives on the lot due to increased demand.

Used Car Inventory

The demand for used cars spiked to a record-breaking high during the pandemic — and so did the price of used cars. Many used-car dealers have seen record years and profits as consumers looked to them for the vehicles they wanted. The high prices on new vehicles have made used cars more desirable for many consumers, making even used cars more expensive and harder to find, as well. 

However, as new car inventories get increasingly better towards the end of the year and into next year, it will similarly lead to an increase of inventory for pre-owned cars, too. 

In the second quarter of 2021, the average transaction price for a used car was $25,410, up from $22,977 in the first quarter, and up 21% year-over-year, according to Edmunds. However, there are signs that the used-car market is leveling off somewhat. The increasing value of trade-in opportunities will give owners incentive to offer their current vehicle to dealerships in exchange for the latest model, especially in early 2022. 

Now is a great time to contact past buyers who might not be using their current vehicle much because of the pandemic or who might be interested in an upgrade.

What Low Inventory Means for Auto Dealerships

Some dealerships actually are benefiting from the low auto inventory. As soon as vehicles are driven onto the showroom floor, they are driven right off again. Many customers are not willing to wait for another model or additional features. 

Automakers are getting more creative in order to fill up your dealership’s lots. They are adjusting availability options on some models. Nissan reportedly even pulled navigation systems from thousands of vehicles in order to keep production lines moving and meet demand.

What this also means, however, is that competition is stiffer than ever for dealerships around the country. If you need help beating your other local dealerships for customers, you need TECOBI because our system works.

woman standing next to new car

When the Auto Industry Will See More Inventory

Unfortunately, it’s possible that the auto industry may never see inventory return to pre-COVID numbers. For the time being, the auto industry will need to adjust to the new normal. However, your lots should be filling up with more vehicles more and more as time goes on, especially as the semiconductor situation gets better. 

In the meantime, if you need assistance finding all these rampant car buyers to sell the inventory you do have on your lot, TECOBI can help.

Car Dealership Lead Generation at TECOBI

 The future of car dealership lead generation is already here, and it’s TECOBI. TECOBI’s system works. We not only generate your online auto leads, but we help set the appointments for you. Then, all you have to do is sell the cars.


young couple choosing cars in dealership

How do we do it? We show the best inventory and your latest specials to the people near your dealership. We drive them from Facebook and Instagram, straight into your dealership and into their new vehicle. We are the dealership marketing proof that you don’t need to lie to sell cars on Facebook. So don’t do it! Instead, trust the automotive marketing experts at TECOBI. We’ll help you sell cars and retain the trust of your market and your customers.

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