Honda overtakes Kia and Toyota on U.S. inventory efficiency index in July

An inventory efficiency index developed by Cloud Theory ranked American Honda as the most efficient mover of vehicle inventory nationwide, separating itself from last month's leaders Toyota and Kia.

In last month's rankings, Toyota, Kia and Honda were in a tight battle for U.S. efficiency supremacy, with the three brands each separated by less than a point and a half.

Cloud Theory is a Grand Rapids, Mich.-based software company that aims to provide comprehensive, updated efficiency data to help manufacturers make decisions about marketing and inventory distribution. The data updates daily.

Cloud Theory's "inventory efficiency index" assigns scores to vehicle makes based on active inventory and sales data in comparison with competitors. A score below 100 indicates supply is outstripping demand, while a score above 100 suggests the vehicle is selling more efficiently than average.

In July, Honda took clear leadership, surpassing Kia by almost eight points and separating from Toyota by almost 16 points. Honda's 13.8 month-over-month gain in efficiency was fueled by an improving Vehicle Movement position, up 11.5 percent, despite a 5.6 percent drop in its available supply. Several key models, including Accord, Civic and Pilot, likely contributed to this outcome.

Rick Wainschel, vice president of data science and analytics at Cloud Theory, said the marketplace for cars is fluid, and there is no guarantee Honda will be No. 1 next month.

"If you look over the course of the first six months of the year, you had Toyota in the No. 1 position for 4 out of the last 6 months. You had Kia in the No. 1 position for two in March and April. The fact that there is this convergence that occurred last month, there's always a lot of fluidity and dynamism in the marketplace," said Wainschel.
Wainschel explained how the supply and demand curves for a brand affects its efficiency index.

"When there's a supply decline month over month, you have a natural level of pent-up demand in a lineup across the board for a brand like Honda. If they have a decline in inventory, it's going to be very likely that you're going to see an increase in their efficiency index because the cars that are available are going to be even more in demand, because there's a shorter supply and demand, " Wainschel said.

In the next tier of leading brands, Cadillac continued to improve its score and rise through the ranks, taking it past BMW to sixth position. Cadillac began the year ranked 13th.

On a regional basis, Honda now leads in 5 of the 9 U.S. Census regions, including all three East Coast regions.

Kia's regional leadership is focused more in the country's lower Midwest, while Toyota is stronger in the West.