Part of the reason for the accumulation of outgoing models is high interest rates that are keeping many consumers out of the market.
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The share of new outgoing model-year vehicles sitting on dealer lots in May about matched that in May 2019, the year before the pandemic, signaling that reviving inventories are returning conditions to normal levels.
2023 models rose to about 7% of vehicles on dealer lots in May. That’s up from outgoing model-year share of 5% a year ago, 4% in May 2022 and 7% in May 2019, according to Edmunds, which observed that the surplus is bringing the return of discounts.
It put the average discount for the 2023 models at $4,147, up from $1,919 for last year’s outgoing models and $357 for the previous year’s. That’s getting closer to 2019’s average $4,600 discount for 2018 models.
Edmunds said that more than a quarter of 2023 model-year purchases financed at dealerships were getting average annual percentage rates of less than 2%, versus 4% of 2024-model purchases.
“For dealers and automakers, the trend serves as a moment of caution surrounding the old habits of overproduction and inventory glut,” Edmunds Head of Insight Jessica Caldwell said in a press release. “It’s also a reminder that the expensive vehicles now being discounted were strong sellers one to two years ago, showing just how significant high interest rates are in today’s market.”
Domestic brands are experiencing the biggest supply glut, Edmunds said.
