How Car Dealers Get Rid of Unsold Inventory
While cars may last for many years, they still have a limited shelf life in terms of how long they can sit on a dealer lot. Here’s how car dealers get unsold inventory off the lot:
Top Car Dealers
Top brands like Chevy, Ford and Hyundai want you to drive their cars no matter what it takes to get you behind the wheel. If a dealer is having trouble selling inventory, the automaker itself may decide to offer attractive lease terms in an effort to get as many cars off a dealer's lot as possible.
This may be effective during sluggish economic times when someone who is in the market for a car may not know whether he or she will have a job in a year or two from now. It may also be more attractive to younger drivers who may have children, get married or otherwise incur additional expenses that may make a full car payment less affordable in the long-term.
Leases generally offer two advantages compared to buying a car outright. First, the monthly payment is lower because the person acquiring the car is only paying for depreciation over the term of the lease. Second, it is generally easier to transfer a lease to another person than it is to sell a vehicle. Those who choose to lease should know that they may be able to trade it in at or before the end of their lease term to lock in any equity that they may have.
While a dealer would much rather sell a car and make more money off of the transaction, getting a car off of the lot makes room for a new one. As a general rule, new model year vehicles are more expensive than previous year models, and they may be easier to sell depending on how desirable they are to consumers.
Luxury Car Dealers
It isn't uncommon for luxury cars to take longer to sell because of their higher price tag. They may also take longer to sell because buyers looking at higher end vehicles may be particular about the features and finishes that they want. In some cases, luxury car companies themselves may be particular about who they sell to.
By restricting the number of people who can purchase the car, it helps the brand to retain its exclusive image, which helps it to charge a higher price. However, if a luxury brand is having trouble selling a particular make or model in a given year, it may decide to offer a discount to get the inventory off of the lot.
As with economy or other less luxurious car brands, it may also be open to leasing its vehicles. However, it is more likely that unsold inventory will be sold to fleet buyers as part of a luxury rental car program or to other dealers looking to meet the needs of its customers.
In some cases, a dealer may decide to destroy or otherwise scrap any vehicles that it cannot sell. While this may seem like a waste of resources as well as a financial hit to the dealer, it may help from a scarcity standpoint, which benefits the brand overall.
Best Car Dealer Discounts
The best car dealer discounts are generally going to come during the end of the calendar year as well as the beginning of a new model year. Therefore, it is in your best interest to research when the new model year begins for your preferred brand as that is when you may want to target buying or acquiring a new vehicle.
Economic factors will play the largest role in how much you will be able to save. If you choose to buy in November or December during an overall economic slowdown, you could save up to 20 percent or more off of the sticker price. You may also be able to get customer loyalty bonuses or other discounts on top of any manufacturer or dealer rebates.
Your ability to negotiate is also going to determine how much you save overall. To enhance your negotiating position, do some research about current discounts or other offers in your area. Then, email the dealer and mention them before you get to the lot. If the dealer isn't willing to give you the price that you want, you can start talking to another local dealer or expand your search regionally or nationally.
General Tips to Get a Good Deal on a Car
There are a few general tactics that you can use to get the best possible deal on a car. First, those with good credit can get a lower interest rate on any loan that they use to finance the purchase. Interest paid on the loan is one of the biggest factors that will determine how much you pay for the vehicle overall.
Therefore, keeping your interest rate as low as possible increases the odds that you stay within your budget. Typically, a dealer will work with a dozen or more banks and will work with you to make sure that you get the rate that you want and keep your monthly payment in line with your expectations.
You may also want to get financed before you decide to start shopping. This will help to narrow your budget and give you more confidence when you tell the salesperson what you are looking for. Remember, it is in the dealer's best interest to sell you the most expensive car on the lot, and not knowing what you want or need could lead you to buy a vehicle that you can't really afford.
One final tip would be to walk away if you aren't sure about a vehicle or a deal that you have been presented with. By walking away, you don't feel pressured into signing purchase documents before you are ready to do so. It also reduces the odds that the salesperson is able to use further tactics in an effort to get you to agree to a deal that you aren't truly comfortable with.
Dealers never want to keep a car on the lot for any longer than it needs to be there. If a car has been on the lot for more than a month or two, it may be possible to ask for and get a discount on the sticker price or get other perks to add value to the purchase. As long as you are serious about taking a vehicle off of the dealer's hands, that dealer is generally going to give you what you want.