Automotive Landscape Shifts as Brands Adapt to Changing Dynamics

The automotive industry is undergoing a significant transformation, with major players adjusting their strategies to navigate the evolving market landscape. As Stellantis brands like Jeep, Ram, and Dodge slash prices to address inventory surpluses, Toyota and Honda are facing strong demand, leading to price increases for their vehicles. This comprehensive report delves into the macro and micro trends shaping the industry, offering insights into supply, demand, pricing, and consumer behavior.

Navigating the Shifting Automotive Landscape

Stellantis Brands Slash Prices to Offload Inventory

The automotive market is experiencing an adjustment, with new-car prices declining by 1.5% year-over-year in September. This trend is particularly pronounced among Stellantis brands, which are grappling with significant inventory surpluses. Jeep, Ram, and Dodge models are sitting on dealer lots for an average of 131 days, well above the market average of 72 days. To address this challenge, these brands have deployed heavy customer incentives and discounts, leading to price drops of 5%, 7%, and 3%, respectively. This strategy aims to help Stellantis sell down its excess inventory, as the company has also cited production cuts as a factor for lower shipments in the third quarter.Despite the price declines among Stellantis brands, the overall average price of new vehicles remained steady at approximately $49,000. However, not all automakers are following this trend. Toyota and Honda, for instance, have seen price increases of 3% and 8% year-over-year, respectively, as strong demand has kept their prices elevated.

Seasonal Trends and Inventory Adjustments

The new-car market in September experienced a seasonal dip in searches, down 5% month-over-month, following typical post-Labor Day patterns. Additionally, the impact of Hurricane Helene in the southeastern United States further contributed to the slowdown, with demand down 7% week-over-week in affected markets compared to a 1% decline for the rest of the country. The full effects on demand, sales, and inventory, including potential production halts at some plants, will become more evident by the end of October as the impact of Hurricane Helene and the subsequent Hurricane Milton is assessed.Despite the temporary slowdown, inventory levels in September remained elevated, up nearly 30% year-over-year, as manufacturers like Ford, Chevrolet, and Honda replenished their stocks after the chip shortage recovery in 2023. Ford led the inventory growth, with models like the Super Duty F-250 and Bronco driving a 33% year-over-year increase. Chevrolet and Honda also expanded their inventories significantly. While the market gradually stabilized in September, with days live averaging 72 days, this figure is still up 42% year-over-year, though below the 80-day average seen in 2019.

Stability in the Used-Car Market

In contrast to the new-car market, the used-car segment remained relatively stable in September. The average price stood at $28,882, which is nearly unchanged since the beginning of 2024 but down 5% year-over-year. Consumers continue to gravitate toward used vehicles for affordability, even as the average vehicle age increases slightly to 5.2 years with mileage just over 60,000. This stability in the used-car market is helping buyers navigate the fluctuations in new-car prices and high interest rates.

Diverging Trends in the EV Market

The electric vehicle (EV) segment is also experiencing a divergence between new and used markets. While used EV searches are growing faster than new, the inventory levels are not entirely aligned with the demand growth. New EV inventory outpaced demand, growing by nearly 50% year-over-year, while sales lagged, and the average price decreased 3% year-over-year, compared to a 2% drop for all new vehicles. Models like the Chevrolet Blazer EV and Cadillac Lyriq are sitting on dealer lots longer than average. In the used EV market, prices have dropped 9% year-over-year, compared to a 5% drop for all used vehicles, while consumer interest in used EVs continues to grow, with a 32% year-over-year increase in searches, in contrast to a 2% decrease for all used-car searches.The automotive industry is navigating a complex and dynamic landscape, with Stellantis brands adjusting their pricing strategies to address inventory challenges, while Toyota and Honda maintain strong demand and pricing power. The used-car market provides stability for price-conscious consumers, while the EV segment experiences diverging trends between new and used models. As the industry continues to evolve, automakers and consumers alike must adapt to the changing market dynamics to succeed in this rapidly transforming landscape.