Auto and Motor Vehicle Wholesalers NAICS 423110

May 11, 2026 - Auto Wholesale Inventory Shrinks on Geopolitical Supply Shortages

• Automobile wholesale inventories are shrinking in Q1 2026 (down 3.1% YOY in March per the Census Bureau) as dealers struggle to replenish stock amid persistent supply shortages and strong demand for used vehicles. The market continues to feel the effects of pandemic-era production cuts, which reduced the number of late-model vehicles now entering wholesale channels through lease returns and trade-ins. At the same time, consumers priced out of new vehicles are driving strong used-car sales, causing dealers to buy aggressively at auctions and quickly absorb available inventory. Automakers have also maintained tighter production strategies rather than rebuilding large inventories, limiting the flow of surplus vehicles into wholesale markets. Industry uncertainty tied to tariffs, supply-chain volatility, uneven EV demand, and the US war in Iran are all contributing to the inventory headaches of the automobile industry.
• Car affordability has become a major drag on US auto sales heading into 2026, with 52% of dealers citing the economy as a barrier to sales in Q1 2026 - up from 45% a year prior. A Washington Post/ABC News poll found 74% of Americans consider buying a new car unaffordable, unsurprising given the average new car price was $49,191 in January 2026. Monthly payments are also at record highs, with Edmunds reporting the average financed new car payment reaching $772 in Q4 2025 and one in five buyers now committing to $1,000 or more per month, contributing to Cox's projection that February 2026 vehicle sales will fall 3.4% year-over-year. Some relief may be on the horizon through lower interest rates and more off-lease used vehicles entering the market, though luxury brands like Porsche (averaging $128,761) continue pushing overall price averages upward.

• Even with producer prices for motor vehicle and parts wholesalers up 12.3% year over year in March 2026, the industry isn’t exactly cruising. The price jump says more about rising costs than rising demand. Tariffs, higher labor bills, and stubbornly expensive transportation are forcing wholesalers to charge more just to keep pace. Meanwhile, high interest rates are cooling vehicle sales, leaving dealers cautious about stocking inventory and trimming orders for parts. Consumers are also stretching the life of their cars, sticking to must-have repairs and skipping upgrades, which takes a bite out of parts volumes. Add in uneven auto production schedules and tighter inventory discipline from manufacturers, and wholesalers are moving less product overall. In short, prices are climbing, but volumes are shrinking — a combination that’s squeezing margins and making clear the real problem isn’t pricing power, it’s a demand slowdown.
• Battery-powered cars will make up half of all US auto sales by 2039, according to a forecast by consultancy EY, a delay of five years from previous projections. The adjusted forecast reflects a changed political reality with regards to Electric Vehicles (EVs) as the Trump administration eliminated EV targets for automakers and cancelled a $7,500 consumer tax credit for buying an EV. The US now stands to fall behind other countries in the EV race, particularly China. US consumers had already been skeptical of EVs due to their high price and a lack of sufficient charging infrastructure across the country. As a result, EY expects that market penetration for EVs will stay relatively flat at 11% of US auto sales in the next four years, up from 8.1% in 2024. By contrast, EVs are forecasted to make up 70% of auto sales in China by 2039.