What Happens to Dealership Cars That Don't Sell

Have you ever wondered what happens to dealership cars that don’t sell? Many people assume there is a hidden location for all those unsold vehicles. However, this is far from the truth. Dealerships have sophisticated strategies and mechanisms in place to ensure that even the most dated and unwanted vehicles eventually find a buyer.

Strategies Beyond Disposal

Dealerships do not simply discard or send unsold new cars to some mysterious storage facility. Instead, they employ a variety of methods to clear their inventory and make a profit. The process often involves significant discounting, increased financial incentives, and other creative solutions.

For instance, dealership managers are sometimes willing to accept lower prices or more favorable payment terms in order to sell vehicles that have been languishing on the lot. In some cases, dealers will even pay off their own financing on these vehicles to facilitate a sale. This may result in the dealer offering a bonus to a salesperson who manages to sell one of these vehicles.

Types of Unsold New Cars

Perhaps a more precise question would be: What happens to brand new cars that don’t get sold before the end of the current model year? These vehicles are often referred to as 'leftovers' as soon as the new model year starts to roll in. Auto manufacturers provide financial incentives to dealers for these leftover vehicles to help offset their profit margins.

Inventory Management Practices

After a certain period, dealerships cannot simply keep offering generous discounts without incurring significant financial losses. There are several steps that dealerships take to manage their unsold inventory:

Other Dealerships: Sometimes, dealerships within the same brand can buy these vehicles from each other to make room for new stock. However, this is not always feasible, especially if the vehicles are particularly old or unpopular. Trade-ins: In some cases, the unsold new cars are purchased by other dealers as trade-ins to offset their own inventory. This is a common practice but still limits the range of potential buyers. Auctions: If the dealerships cannot find an immediate buyer or if other options are exhausted, the vehicles are often sold at auctions. However, this is usually the last resort due to the associated costs and fees.

The Role of Manufacturers

Manufacturers play a crucial role in managing dealership inventory. They offer financial incentives to dealers to help clear out old stock. These incentives can include cash rebates, lower financing rates, and additional promotional support. Additionally, sales staffs often earn bonuses for selling these leftover vehicles, which further encourages dealers to push these cars to customers.

Conclusion

In summary, dealerships do not have a single 'Area 51' for unsold new cars. Instead, they employ a variety of strategies to manage and clear their inventory. Whether through negotiations with other dealers, trade-ins, or auctions, unsold vehicles eventually find a home. These processes sometimes involve significant financial incentives and discounts to ensure that even the most dated vehicles sell.