Will Shortages Impact Labor Day Sales?

By Cee Lippens August 30, 2021
The pandemic continues to upend car sales, with car shortages ongoing Labor Day sales may lag.  The pandemic continues to upend car sales, with car shortages ongoing Labor Day sales may lag.

Labor Day weekend is almost upon us, one of the busiest weekends to shop for a new car, truck, or SUV.  Normally car dealers offer some of their best car incentives and promos of the year on the holiday weekend to entice buyers.

This year, like last year, looks to be a little different. Chip shortages continue to slow new vehicles rolling off the line in a timely fashion and making it into dealer showrooms. “Similar to last month (July), dealers currently have approximately 942,000 vehicles in inventory available for retail sale, compared with roughly 3.0 million in inventory two years ago,” said Thomas King, president of the data and analytics division at J.D. Power.

Labor Day weekend also marks the unofficial end of summer, beginning the auto industry's end-of-the-model-year sell-down season, with automakers offering some of the year's best deals to make way on dealer lots for next year's new models. 

According to Edmunds analysts, new vehicle inventory at dealerships nationwide was down by 48% over all this year. With so many popular models in short supply and some of the highest prices for both new and used models, this year's sell-down season will find deals harder to come by than typical past years.

“The chip shortage continues to be the driving force behind (new) vehicle availability, creating the lowest average incentive spending since 2013,” said Nick Woolard, lead industry analyst at TrueCar. “Continued strong demand is creating an environment where vehicles are selling extremely quickly. About a third of vehicles are selling within a week of arriving on the dealer lot, compared to just 18% last year,” added Woolard.

One of the side effects of the pandemic has been vehicle owners remaining very loyal to their specific brands, according to the J.D. Power 2021 U.S. Automotive Brand Loyalty Study. Brand loyalty may help dealers enjoy Labor Day weekend sales even without a lot of incentives to entice buyers, new and old, onto their lots. 

Still, some manufacturers are offering cash incentives this fall including Hyundai, Kia, Nissan and Toyota. All companies that fared slightly better with their microchip supply lines. “Though new-vehicle sales continued to decline in August, some brands saw a year-over-year increase in sales. Toyota is operating extremely well considering their inventory days’ supply is roughly half the industry average,” said Valeri Tompkins, senior vice president of OEM Solutions at TrueCar.

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Last modified on Tuesday, 07 September 2021 18:02