What happens to unsold cars at a dealership?
Have you ever wondered how nice it’ll be if dealerships just gave away all the new cars that don’t sell?
For decades, people familiar with the car business industry, let alone consumers with the industry’s faintest idea, are often overwhelmed by the massive number of cars, SUVs, and trucks stuck in a dealer warehouse for an extended period.
Hence, the question, “what happens to unsold vehicles?”
But there isn’t a straightforward answer.
The auto business sometimes goes deeper than just selling cars to available buyers.
To get a realistic answer to what happens to new cars that don’t sell, one needs to get at least a brief hint of business structure in the auto-sales industry.
The Business of Car Sale
It is common knowledge that automobile manufacturers do not sell manufactured vehicles directly to consumers or the public.
In certain countries, there exist laws put in place to prevent that.
Instead, automobile manufacturing companies sell vehicles to franchise car dealers.
These car dealers, in turn, sell the vehicle to the final consumer.
Car dealers are the link between automobile manufacturers and consumers.
So auto companies’ customers are car dealers, and car dealers’ customers are the final consumers.
The problem arises when cars bought by the car dealers wound up not being sold.
These cars are called “slow-selling cars.”
Dealers can’t send back vehicles that fail to get sold to the manufacturers for refunds.
That leaves dealers with the only option of seeking whatever way to sell every car in their possession or else bear a financial loss.
The unsold vehicles become a liability in a car dealer’s possession as they take up physical space meant for a car that might quickly get sold.
They also incur maintenance costs on the car dealers’ part.
Car dealers just have to seek ways to sell the unsold.
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Selling the Unsold New Vehicles
This is where consumers seeking to buy cars can take advantage.
The longer unsold cars remain in possession of a buyer, the more money it costs the dealer to maintain and denies him the opportunity to get new and potentially profitable vehicles.
For this reason, the buyer will be motivated to sell such unsold vehicles for a ridiculously low price tag to available buyers and make at least a decent return.
In such a situation, making a profit on such vehicles isn’t the dealers’ primary aim.
Dealers will offer special incentives to lure buyers to such vehicles.
That is why when purchasing a vehicle, salespeople occasionally bring into the option vehicles that have no specification of what you asked for.
These vehicles are the “slow-selling” vehicles.
Dealers also will offer larger discounts on vehicles that fall in this category.
Automobile manufacturers also get involved in this trick, for it is in their best interest for car dealers to sell vehicles bought from them as they are their immediate customers.
Hence, they offer general public incentive programs like special subsidized lease deals, and cashback offers to attract buyers.
Another option car dealers implore is offering these slow-selling cars as a loaner car to be used by customers for a certain period for an agreed fee.
Some consumers without cars or having a temporary breakdown on their cars could loan these cars for everyday transportation.
A dealer converts a slow-selling/unsold car into a nearly-new used vehicle and could eventually sell it for a substantial discount through this tactic.
In some situations, dealers come together and trade to solve their unsold car’s problem.
A particular dealer might experience rapid sales of a specific brand of vehicle in his region.
In contrast, that same brand might be struggling to sell in another region, hence the need for trade.
For example, in the Southeast, all-wheel-drive and 4-wheel-drive vehicles are not popularly used as they are in the Upper Midwest and New England.
Car dealers’ usual and most common practice to get off unsold cars of their possession is via auto auction.
Several kinds of auctions feature a wide range of both new and used vehicles, including online auction.
This auction becomes a medium for dealers to offload the “unsold or slow-selling” vehicles.
As the saying goes, “Anything can be sold; it just boils down to the price,” including new cars that don’t sell.
So in answer to the question on the outset, “what happens to unsold cars?” technically, unsold vehicles don’t exist as they ultimately get sold.
It just takes a longer time frame and sometimes a different route to be sold.
But new cars that don’t sell at dealerships get sold eventually.