Impact of inventory shortages on US new vehicle industry market dynamics | 2022

As the industry grapples with exceptionally low inventory
levels, an obvious question is what else is impacted? Clearly,
retail deliveries have been hit hard, as we’ve seen the SAAR
plummet from 18.5 in April down to 12.2 this past September. But a
metric that has also been impacted substantially, but one that
doesn’t get as much visibility as retail deliveries, is brand
loyalty. As the chart below indicates, as industry days supply has
been declining from its January peak, brand loyalty has followed
the same path, starting just one month later. The correlation
coefficient between these two metrics is a robust .79, rising to
.86 if the March and April 2020 COVID months are removed.

Not surprisingly, not all brands’ loyalties have been impacted
to the same degree. Among the 19 mainstream brands, Ford, Subaru,
and Chevrolet are seeing the greatest direct correlation between
days supply and brand loyalty. In contrast, Buick and Mitsubishi
are experiencing inverse correlations, implying that as inventories
dwindle, brand loyalties actually rise.

Within the luxury space, Lincoln, Porsche, and Mercedes-Benz
show the greatest direct correlation between brand loyalty and
supply, while Genesis has a mild inverse correlation.

These data identify those brands whose loyalties drop in the
most direct correlation with inventory shortages, or those brands
most vulnerable to defections in today’s environment. An efficient
marketing and/or conquest campaign will focus on these marques
while bypassing those brands that seem more immune to the inventory

Posted 02 November 2021 by Tom Libby, Associate Director Loyalty Solutions and Industry Analysis, Automotive, IHS Markit


The smell of the leather seats, the sound of the throttle, and even light from outside—all affect your state of mind. That’s what makes a good car great.

Leave a Reply