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Inventory constraints impede August vehicle sales

September 4, 2020
New-vehicles sales in August, overall, were down 11% compared to last year, according to estimates from industry forecaster ALG. In July, the decline was 15%.
Several factors outside of the control of automakers hurt sales results. There were two fewer sales days last month as compared to August 2019, and sales over Labor Day weekend last year fell within August, but this year will be tallied in September.
As a result, for many automakers, their daily selling rate, or the number of new-vehicle sales per selling day, showed a much less negative month.
Regardless, tight inventory across the industry weighed heavily. Toyota, Lexus, and BMW all had inventories of less than 40 days — normal levels are around 60 days — and as Charlie Chesbrough, senior economist at Cox Automotive, pointed out, "Obviously, you can’t sell what you don’t have."
Transaction prices also slipped slightly compared to July, but remain up 3.9% compared to the same time period in 2019.
"Vehicles are continuing to sell at higher transaction prices when compared to the prior year even amidst the pandemic," said Eric Lyman, Chief Industry Analyst for TrueCar subsidiary ALG. "However, we are seeing month-over-month declines in average transaction price since May due to pullbacks on the richer automaker incentives that were in the market at the beginning of the pandemic.
"Consumers leaned into those offers to upgrade to higher priced trims and models, which drove up transaction prices."