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Toyota inventory levels have never been lower than they are right now. Go for a drive to your local Toyota dealer and you’ll see few new cars on the lot. We’ve noticed fewer Toyota listings on CarEdge Car Search. Production challenges have plagued Toyota for the entirety of 2022, and their dealer body currently has a 36 hour supply of on hand inventory. For perspective, in 2019 Toyota had a 60 day supply of inventory. To say Toyota’s production challenges are severe is an understatement.
After weathering the initial chip-shortage in 2021 better than their peers, the world’s largest automaker has officially fallen behind. Toyota is struggling to supply their dealer body with inventory, and as a result their sales are down 23% for the first quarter of their fiscal year (April-to-June), while average transaction prices have reached all-time highs; $37,336.
It’s easy to forget just how far the automotive industry has fallen from pre-pandemic normals. In July, automakers had a 38 days’ supply of on hand and in-transit new vehicles. That may not sound too bad compared to the recent past, but consider this: In 2019, automakers had 86 days’ supply.
Toyota Inventory Levels Tumble, Wait Times Drag On
Inventory Units - December 2023
Days Supply - December 2023
Toyota car
54,100
27
Toyota truck
144,700
31
Total Toyota
198,800
30
This week, Toyota Motor North America executive vice president of sales, Jack Hollis spilled the beans on what Toyota expects the coming year to look like. In short, Toyota doesn’t see inventory ever returning to pre-pandemic levels. This is the new normal. Crystal ball aside, Hollis did provide key insights into what car buyers should expect going into 2023.
Jack Hollis, who happens to have an extensive working history with Ford’s Jim Farley, was sharing his candid outlook at an event hosted by the Automotive Press Association. For what could very well have been a bland interview full of scripted answers, the world learned surprising new details about just how bad the inventory shortage has become at times for Toyota.
Hollis said that Toyota’s demand continues to outpace automakers’ production capacity. We’ve heard that before. However, it’s the details that made headlines. Hollis said that Toyota dealerships recently sunk down to a 36-hour supply of new vehicles. This has led to extensive dealer markups, accessories, and add-ons. If a consumer wants to buy a new Toyota off a dealer’s lot, they are likely going to pay above MSRP.
To find Toyota dealers who aren’t charging above MSRP, head to the community forum or markups.org.
We know from our research that wait times to order a new Toyota extend upwards of a year for Toyota’s electrified lineup. For Toyota hybrids and plug-in hybrids, factory order wait times are commonly around one year. For the Toyota RAV4 Prime and Prius Prime, wait times are now 18 months to two years in the worst cases. Keep this in mind if you’re in the market for a Toyota plug-in hybrid.
Why has Toyota struggled so much while other automakers seem to be weathering the storm better? It appears as if Toyota’s domestic production in Japan is where the company has taken the biggest hit. Japan has faced its own struggles (COVID and an earthquake to name a few), however the entire Japanese automotive industry is closely tied to suppliers and factories in China.
Toyota is heavily reliant on Chinese parts suppliers, and the latest round of COVID shutdowns didn’t do them any favors. In August, a new round of Chinese factory shutdowns, this time weather-related, are disrupting Toyota’s Asian supply chains.
This week, Automotive News reports that Toyota’s biggest domestic competitor is looking for a way out of reliance on China’s supply chains. According to Japanese publication Sankei, Honda Motor Co. is looking for ways to decouple their supply chains from reliance on China. Last year, nearly 40 percent of Honda’s production capacity was in China.
With the latest heat wave causing the third major supply disruption in two years for Toyota, we would bet that Toyota is looking at its options moving ahead.
Inventory Will Never Return to “Normal”
Wait times for the RAV4 Prime range from one to two YEARS.
During the first half of 2022, even the lauded analysts at AutoForecast Solutions seem to have underestimated just how severe and prolonged the chip shortage and subsequent car shortages are. Now, one of Toyota’s top executives is forecasting a similarly poor situation for 2023.
“We’re going to be dealing with this for one more year,” said Hollis. “I do not believe we’re going to see growing dealer stock for one more year.”
He also shared doubts that any automaker would return to pre-pandemic inventory levels. “They just won’t,” Hollis asserted. There was also a relevant point to be made regarding how car buyers’ behavior has changed. Hollis noted that customers now trust online car buying, and that’s going to impact lot inventory moving forward. Dealers don’t have to hold inventory to make sales these days.
Consumers are partly to blame for the continued high prices at dealerships. Hollis remarked that people don’t seem to mind going without the manufacturer incentives and holiday discounts of years past. “Some of the highest customer satisfaction scores in the entire industry are occurring right now, and everyone’s buying a vehicle at MSRP,” he said.
Toyota Slashes Incentives
Source: Cox Automotive
As a result of decreased supply, Toyota has drastically reduced incentives for consumers. For the first time since 2017, Toyota incentives are below $1,000. For the April-to-June quarter, Toyota’s average incentive per vehicle was $772, down 66% year-over-year.
Toyota brand incentives were even lower at just $672 per vehicle. Lexus incentives were down 71% to an average of $1,474 per vehicle. From 2019 to 2021, Lexus incentives averaged more than $5,000 per vehicle.
This means that buyers are more likely to pay MSRP or higher. As Hollis candidly pointed out, car buyers are not balking at the idea of paying higher prices. Toyota dealers are having no problem selling every vehicle they receive from the factory. Simply, there’s no reason to incentivize buying.
In the first quarter of the fiscal year, Toyota’s (Toyota + Lexus) average transaction price approached $40,000. Just two years ago, this figure was under $35,000.
Hollis Defends Toyota’s EV Strategy
At the Automotive Press Association’s event, Hollis also touched on the long-term outlook for Toyota’s delayed entry into fully-electric vehicles. Hollis reiterated Toyota’s belief in offering a wide range of electrified vehicles, not just BEVs, as the best way to reduce overall carbon emissions. He is unabashedly skeptical that American drivers will adopt EVs at anywhere near the pace that government goals have suggested.
Considering that the average electric vehicle transaction is $10,000 more than the overall industry average, I think Hollis is onto something. Throw in battery and raw material shortages, poor charging infrastructure and a simple lack of inventory, and Toyota’s roadmap starts to look a lot more wise.
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We track new car inventory monthly, and it’s been encouraging to see automakers like Ford and Toyota having more cars shipped to dealers. Still, automakers are selling every car they can make. With that said, more drivers are placing factory orders for vehicle builds that might not arrive until well into next year, or worse. Here’s how long car buyers are waiting for the vehicle they want. We want to send a special thank you to CarEdge Coach Mario for sharing this update with our audience!
Important note: These times are strictly for factory ordered cars. Many of these models are now available on dealer lots.
Kia and Hyundai Wait Times
Hyundai Motors owns 51% of Kia, and the two Korean automakers have grown increasingly close over the past decade. Today, many of their vehicles share components, and therefore have been similarly impacted by supply chain constraints.
These are the factory order wait times our team of Car Coaches is hearing in 2025:
Kia Telluride – 2 to 3 months
IONIQ 5 – 3 months for factory orders
Elantra (some trims) – 2 to 4 months
Kia Sportage – 2 to 3 months
Subaru Wait Times
Right now, buyers placing orders for a Subaru are regularly being told that the wait time for delivery will be between one and four months, and in some cases longer. Subaru was hit hard by the chip shortage, and has yet to pull out of the slump.
In general, 2-3 months wait can be expected for any custom-ordered Subaru in 2025. Here are some additional details from what CarEdge Coaches are seeing:
Ascent: 1-4 months
Crosstrek: 1-3 months
Forester: 1-2 months
Impreza: 1-3 months
Legacy: 1-3 months
Toyota Factory Order Wait Times
How long you should expect to wait depends on the Toyota model and spec that you want. For Toyota deliveries, you’ll be looking for an available allocation rather than a custom order. For Toyota hybrids and plug-in hybrids, wait times are generally much longer.
In 2025, most Toyota models no longer have long waitlists for an available allocation, with the exceptions being the Prius, GR86, GR Corolla, Grand Highlander Hybrid, Land Cruiser, Sienna, Supra M/T and Spec Edition TRD Pros. For these models, you can expect to wait 3-4 months for an allocation that’s not already spoken for.
It is worth noting that more Toyota hybrid models may start seeing longer wait times as demand increases during summer buying season.
Honda Wait Times
On average, Honda factory orders (or allocations) placed today can expect a short wait before delivery, generally less than two months. The only remaining Honda models with inventory constraints are the Civic Si and Civic Type R.
Otherwise, these are the Honda factory order wait times we’re seeing in 2025:
For Jeep and Ram factory orders, wait times depend on what model and trim you want. Don’t forget that these two brands have the highest new car inventory in the industry right now, so lot inventory is especially negotiable. Don’t expect the same negotiability with Ram and Jeep factory orders.
These are the Ram truck factory wait times our team is encountering in 2025:
Ford Factory Orders Wait Times Faring Slightly Better
These are the Ford factory order wait times we’re seeing this year:
Bronco: 6-9 months
Ford F-150: 5-6 month wait time for higher trims (King Ranch, Tremor, Platinum), less than 3 months on XL, XLT and Lariat F-250: 2-3 months F-350: 2-3 months Mustang: 3 months
Tesla Wait Times
Tesla regularly updates wait times for the Model Y, Model 3, Model S and Model X. As of 2025, here are Tesla wait times as shared on Tesla.com. Note that there are many possible configurations that affect estimated delivery dates, so check Tesla’s configurator for the most accurate estimate.
Model 3 RWD with Aero wheels: Less than 1 month
Model 3 RWD with Sport wheels: Less than 1 month
Model 3 Long Range AWD with Sport wheels: Less than 1 month
Model Y Long Range with Gemini wheels: 1-3 months
Model Y Long Range with Induction wheels: 1-3 months
Model S Dual-Motor with Arachnid wheels: Less than 1 month
Model X Dual-Motor with Cyberstream wheels: 1-3 months
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Another month, another new record for car prices. In July, new car prices climbed 0.3% higher, and the average monthly payment increased by 0.9%. Used car prices have decreased at the wholesale level for eight weeks, but new car prices remain at record highs as dealer inventory stays slim. Here’s the latest new car price data from Cox Automotive, what it means for new car prices in August, and our best guess as to when new car prices may finally start to come down.
The Average New Vehicle Transaction Approaches $50,000
Source: Cox Automotive/Moody’s Analytics
The average transaction price (ATP) for a new vehicle increased by 0.3% in July to a new record of $48,182, according to the latest Kelley Blue Book transaction price report. Year-over-year vehicle price increases are astounding. Since July 2021, the average new vehicle transaction has increased 11.9%, or $5,126. Looking back two years to the heart of the pandemic slump, the average new car transaction price is up 21.5% since July 2020. Worse yet, the ATP is up 58% over a decade. In 2012, the average transaction price was near $30,000.
Why are new car prices still going up? Rather than the prices themselves increasing substantially in July, other factors are largely responsible for the new record. The average interest rate increased another 19 basis points last month. The average auto loan interest rates across all credit profiles are 3.86% for new cars and 8.21% for used cars, according to data from MarketWatch. Gone are the days of zero percent interest rates, and the Federal Reserve will likely hike rates higher to get a handle on inflation.
Another factor contributing to record high average transaction prices is the popularity of luxury vehicles. Luxury vehicle share remains historically high, pushing the average ATP higher. The post-pandemic ‘K-shaped recovery’ has resulted in divergent economic situations from one household to the next. One family might be struggling to make ends meet, while the other is more well off than ever before. This trend has contributed to a surprisingly healthy luxury vehicle market, and more consumers willing to pay a premium for a new car in 2022.
Monthly Payments Surpass Rent For Many
The average monthly payment for a new car is now $733/month. That’s a new record, and it’s just a hair above June’s previous record of $730. Nationally, median one-bedroom rent is now $1,450, which is 11% higher than a year prior. In several Midwestern and Southern states, the average car payment is now on par with rent. We’ve never seen this before.
Cox Automotive’s Vehicle Affordability Index really puts this in perspective. The Vehicle Affordability Index is driven by the consumer’s vehicle transaction prices, the income of the consumer, amount financed by the consumer, and the interest rate provided by the lender. The result is a value that represents the number of weeks of the median household income in America that would be needed to buy the average new vehicle.
The number of median weeks of income needed to purchase the average new vehicle in July increased to 42.2 weeks from a downwardly revised 42.0 weeks in June. In other words, the average new vehicle purchase costs as much as 42 weeks of median income in America. Financial advisors generally recommend keeping total car expenses below 20% of monthly income, but very few Americans are able to do that today. With an average monthly car payment of $733, monthly income would need to be AT LEAST $3,665 to achieve this.
New-vehicle affordability in July was much worse than a year ago when prices were lower, incentives were higher, and rates were much lower. The estimated number of weeks of median income needed to purchase the average new vehicle in July was up 15% from last year. One year ago, auto interest rates were near record lows, incentives still existed, and prices were 11.9% lower.
New Car Inventory Improves, But Only Slightly
In July, some automakers had improved inventory. Some, such as Ford and Toyota, had the greatest increases in inventory in several months. Still, with order backlogs and demand far exceeding supply, dealer lots remained nearly empty, and car prices remained high.
New Car Prices Will Stay High For the Remainder of 2022
New car prices will fall once automakers are able to produce more vehicles. What needs to happen for vehicle production to increase? Supply chain disruptions must come to an end once and for all. We’ve been watching automakers ration their supplies of semiconductor chips, wire harnesses, and even electric vehicle batteries as the pandemic and the war in Ukraine continue to disrupt supply chains.
There is now a question as to whether automakers will ever go back to their old ways of over producing vehicles and discounting them well below MSRP. They now see that consumers are willing to pay higher prices for cars, and that’s good for their bottom lines. As long as people agree to pay marked up prices, there will be no incentive to bring prices back down to historical norms. Many in the industry see this as the only path forward, given today’s market conditions.
A Used Car Might Be the Better Value in 2022
Wholesale used car price trends, August 2022. Source: Black Book
There is a bit of a silver lining. For eight weeks in a row, we’ve been tracking steepening declines in wholesale used car prices. We can confidently say that a trend has emerged. At auction, used car prices have dropped about 4% in two months. We expect these declines to soon translate to retail used car prices, and at the very least, dealers will be willing to negotiate a deal. Based on past trends, we expect retail used car prices to begin to decline in September. Don’t hold your breath, a used car might be the better value in 2022.
After years of asking for a used electric vehicle tax credit, we finally have it. Unfortunately, it’s not all that we had hoped it would be. Income limits are strict, and vehicle price caps are even tighter. We analyzed price data to find every EV and plug-in hybrid that may qualify for the used EV tax credit. One takeaway: It’s hard to find a sub-$25,000 electric vehicle!
As far as we can tell from the language of the Inflation Reduction Act, the strict Made-in-America and battery sourcing requirements that apply to new EVs and PHEVs do not apply to used EVs. However, the bill allows for the Treasury Secretary to finalize rules by the end of 2022, so it’s not set in stone just yet.
The Used EV Tax Credit: A New Incentive With Strict Requirements
Beginning on January 1, 2023, car buyers can claim a $4,000 tax credit when purchasing a used electric vehicle for under $25,000. For buyers purchasing an EV under $13,300, this incentive is capped at 30% of the vehicle’s price. The seller must be a qualified dealer, and the buyer must have an adjusted gross income (AGI) of under $75,000 (individual), $112,500 (head of household) or $150,000 (joint filers).
Just how many used EVs can be easily found for under $25,000? A quick look at used EV prices is a reality check. If you’re open to settling for an electric vehicle model with lower range, slower charging and more miles on the odometer, you might find a deal that qualifies.
The used (and new) EV tax credit does make plug-in hybrids (PHEVs) eligible, as long as they have a battery capacity of at least 7 kilowatt-hours. CarEdge’s auto expert Mario Rodriguez analyzed used PHEV prices, and these are the PHEV models that have a shot at qualifying under the $25,000 price cap.
Used Car Prices Are Beginning to Drop, What About EVs?
The latest data shows wholesale used car prices dropping, but that has yet to translate to lower retail prices. Electric vehicles and plug-in hybrids are likely to be the last to see price declines, as they remain in high demand. We’ll keep you updated with the latest info.
The Inflation Reduction Act of 2022 has thrown a wrench in the EV buying plans of many. Just three weeks after we first heard word of this deal between two Senators, it has been signed into law. Time is of the essence if you’re on the fence about an EV purchase! But don’t run out to buy that shiny new Tesla Model Y just yet. The language of the Inflation Reduction Act’s ‘Clean Vehicle Credit’ details requirements and important dates that you need to know about before signing a contract to purchase.
If buying an EV in America is in your future, here’s what you need to know today.
What’s In the New EV Tax Credit? Income Limits and Several New Eligibility Requirements
These are the big changes to the EV tax credit:
For new vehicles, income is capped at $150,000 for individuals, $225,000 for head-of-household, and $300,000 for families (effective January 1, 2023).
The original 200,000 sale cap is removed on January 1, 2023. Tesla and GM will again be eligible.
To qualify, vehicles must have ‘final assembly’ in the U.S., Canada or Mexico.
The new credit is worth up to $7,500, with $3,750 from at least 50% of battery components being produced in the U.S. or Free Trade Agreement countries, and an additional $3,750 if at least 40% of battery minerals originate in the U.S. or FTA countries. These battery sourcing requirements begin when the rules are finalized by the IRS, which must be before December 31.
Beginning January 1, 2024, this incentive becomes available as a point-of-sale rebate.
A used EV tax credit begins January 1, with the lesser of 30% of the selling price or $4,000 available for used EVs purchased from a dealer and costing less than $25,000. Income is capped at $75,000 for individuals, $112,000 for head of household, and $150,000 for joint filers.
Tesla and GM: Wait Until January 2023 to Take Delivery
If you’re considering buying a Tesla Model Y, Cadillac Lyriq or Chevrolet Bolt, wait until January 1, 2023 to make the purchase. The revised EV tax credit removes the 200,000 sale cap for automakers on January 1, 2023. The 200,000 sale cap had previously disqualified Tesla and GM EV models from the original $7,500 EV tax credit.
Why only the Model Y? The Model Y is the only Tesla that will qualify for the new tax credit because of the price caps. The revised EV tax credit caps SUV and truck prices at $80,000, and sedans at $55,000. The only Model 3 under the price cap is the rear-wheel drive Model 3, but it sources batteries from CATL in China, so it is disqualified. The Model S and Model X are far too expensive. The Model Y is the most popular EV in America, so this is still good news for Tesla.
Ford currently makes the Mustang Mach-E in Mexico with batteries from LG Chem (now LG Energy Solutions). LG manufactures these battery cells in Poland, but the battery pack assembly is in North America. It’s unclear if Ford’s battery assembly meets the 40% battery component requirement. Unfortunately, Ford just signed an agreement with Chinese battery manufacturers CATL to supply batteries for upcoming Ford Mustang Mach-E’s. This may disqualify the automaker briefly, but not for the time being. Ford has already announced plans for two battery plants in Kentucky and Tennessee.
Does the F-150 Lightning qualify for the new EV tax credit? Yes, but it depends on where exactly the batteries are sourced from. Ford has said that is sources many F-150 Lightning battery packs from SK Innovation’s factory in Georgia, USA. That’s great for eligibility. However, Ford recently shared that they are sourcing more batteries for the Lightning from Chinese automaker CATL. That could complicate eligibility.
Most F-150 Lightning trim options that include the Extended Range battery (for 320 miles of EPA-rated range) are near or over the $80,000 price cap for trucks. Check your vehicle build specs and pricing to see if your total MSRP is under the $80,000 limit.
If yousecured a written binding contract to purchase before the bill was signed, you could claim the original $7,500tax credit when you file 2022 taxes.
In summary, most Ford electric vehicles will likely qualify for at least half of the new EV tax credit, which would be $3,750. Of course, this depends on battery sourcing. It’s possible that Ford EVs could eventually qualify for the full $7,500 once we know more about where Ford’s battery suppliers source their minerals.
EV Models Manufactured Outside of North America Have Lost Eligibility
The IONIQ 5 won’t qualify for the new EV tax credit until Hyundai opens the new factory in Georgia. That could take two years.
Many of today’s best electric vehicles are made overseas for now. The Kia EV6, Audi etron, Polestar 2, and my own Hyundai IONIQ 5 are all disqualified due to the Made-in-America requirement.
The language of the bill states that as soon as it is signed into law, EVs that do not have final assembly in the United States, Canada or Mexico will lose eligibility. The bill was signed on August 16, 2022.
The ‘Transition Rule’ in the new EV tax credit allows buyers to claim the original $7,500 EV tax credit if the buyer has signed a “written binding contract” BEFORE the Inflation Reduction Act of 2022 was signed into law.
The new bill states that the new used EV tax credit will take effect January 1, 2023 as a tax credit, and it will become refundable at the point of sale starting on January 1, 2024. There are STRICT limitations, however.
To qualify for the used EV tax credit, the vehicle must meet the following qualifications: cost less than $25,000; be at least 2 years old; and sold by a qualified dealer. Buyer income limits are an adjusted gross income of $75,000 for individual tax filers, $112,000 for head of household, and $150,000 for joint filers. Taxpayers are allowed one used EV credit every 3 years.
This Is A LOT to Take In
It’s a wild time to be in the market for an EV. Did we miss something? Let us know in the comments, or better yet chat with our EV and general car buying experts at the CarEdge Community Forum. You can also email me at justin@CarEdge.com. This is an evolving situation!
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