The United States, in September, witnessed an impressive resurgence in the automotive industry, with the SAAR for light vehicle sales reaching a remarkable 15.7 million. This surge marked a 16.2% year-over-year increase, surpassing JPMorgan’s earlier projection of 15.4M.
One contributing factor to the surge in auto sales is pent-up demand. Adverse weather conditions in several states during August may have led potential buyers to delay their purchases, resulting in an influx of sales the following month.
Another key factor driving strong performance is the greater availability of cars in the market. Despite concerns about potential disruptions caused by labor strikes, the UAW strike among Detroit-based automakers had a relatively minor impact on production.
During the initial week, only one assembly plant each at General Motors (NYSE:GM), Ford (NYSE:F), and Stellantis (NYSE:STLA) went on strike. In the subsequent week, the focus shifted more toward aftermarket parts distribution rather than assembly plants. This structure allowed car dealerships to continue replenishing their inventory.
In fact, dealerships added 140,000 more cars to their stock in September, reaching a total of 2,019,000 cars—the highest since March 2021 when the semiconductor chip shortage first emerged.
JPMorgan analysts wrote in a note stating, "We continue to expect industry-wide inventories will normalize higher towards the ~2.5-3.0 million units on dealer lots that we believe represents the 'new normal' level of inventory."
They added that it might take until well into 2024 for the balance of supply and demand to fully normalize due to consistently stronger-than-expected monthly selling rates and the UAW strike.
As of the end of September, General Motors had 432,000 vehicles in their dealer lots, a slight increase from the 428,000 they held at the end of August. This represents a 49-day supply, which is 2 days more compared to the same period last year but considerably lower than the 68-day average over the past decade.
Ford concluded September with 420,000 vehicles in their dealer inventory, resulting in a 66-day supply. This figure is 11 days more compared to the previous year but still closely aligned with their 10-year average of 69 days.
Shares of GM, F, and STLA are up 0.70%, 0.41%, and 0.32%, respectively, in premarket trading on Wednesday.