New-Vehicle Inventory Swells in February | Edmunds

New-Vehicle Inventory Swells in February


New vehicles sat on dealer lots an average of 74 days in February, the longest "days to turn" period since 2009, according to Edmunds' monthly sales analysis. New-vehicle inventory last month also rose by 9 percent year over year.

"The automakers are in a tricky spot," said Jessica Caldwell, Edmunds executive director of industry analysis. "Aggressive incentives are already starting to eat into profits and residuals, but it takes discipline to pull back the production reins in what's still a fairly strong market."

In other words, if the automakers discount the cars further to sell the stagnant inventory, they will eat into their profits. And if automakers also slow production, they might find themselves short on vehicles if more people rush to take advantage of the deals.

Low gas prices and the popularity of SUVs have caused many shoppers to overlook cars completely. Subcompacts, such as the Ford Fiesta or Nissan Versa, were hit the hardest and sat on dealer lots for an average of 102 days. Large cars, such as the Toyota Avalon or Chevrolet Impala, went unsold for an average of 86 days. Even midsize cars, such as the Honda Accord or Volkswagen Passat, sat on lots for an average of 82 days.

The situation presents car shoppers with an opportunity: They are likely to find good deals on many slow-selling car types subcompact, compact, midsize and large) in the coming month as dealers try to clear out excess inventory.

February was also notable for an 11 percent decrease in the lease rate. Last year was a record high for leasing, and Edmunds analysts expect the rate to settle in at about 30 percent for 2017.

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