Car Dealer Lots Are Flush With Unsold Cars as Sales Are Expected To Drop


#1

There should be other articles about the same, but without paywall.

There were 3.95 million vehicles on dealership lots at the end of January, a 4% increase from December and up nearly 3% from the prior-year January, according to data released Monday by WardsAuto.

While January is typically a slower month for new-vehicle sales, analysts say the rising stock levels are becoming problematic because car companies will start this year with more unsold inventory than they had three years ago when U.S. auto sales peaked at 17.55 million for the year. Industry forecasters and some auto executives predict sales this year will fall well below that figure, dropping to under 17 million vehicles for the first time since 2014.


#2

I just wonder how this will realistically impact leasing since interest rates are going up.


#3

They still need to move all these cars somehow…


#4

Could be better prices on outright purchase hopefully since all those cars still new from prior model years sitting on lots.

There are so many even 2017 models offered for sale still as new. Last year saw one dealership offering 50% off on brand new not titled 2016 Buick Enclave. Why not?:slight_smile: Since it wasn’t titled still gets 4 year of bumper-to-number.

Funny thing there is Volvo dealership in Milford, CT still sitting in 2015 S60 tagged as new. Nice discount but still far above what same year used is sold for.


#5

It would/should be priced higher than used since it hasn’t been titled, and has full B2B warranty when purchased.


#6


#7

There was an article over at Automotive News about how dealers are preparing for cost cutting due to this impending slowdown. A sad example touted was how one dealer got rid of bottled water and saves $6k a year…hooray…


#8

I’m hoping for a glut of forlorn C43’s sitting alone and unloved about May or so. And maybe a little fear of uncertainty to hold interest rates steady.

Seriously, could be some innovative sales techniques to get rid of this metal. Let’s hope so. And let’s hope they don’t choose to encourage and incentivize financing the darn things. Let’s bope they don’t trim stuff like loaners and good coffee (and bottled water) at the luxury marques!

Here’s to a year of deals for all.


#9

That’s horrible that people are taking out loans that extend beyond the warranty period on a car. Financial illiteracy is a terrible thing.


#10

Great! Now let’s see all those 2019 S60’s pile up onto lots please and we can get some sub $300 deals going.


#11

Too bad my lease is up next month.


#12

Will you just look for another S60 deal or go rogue with a different car altogether?


#13

Depends on incentives. May try extending my lease to buy some time.


#14

Flush with unsold cars ???

Their inventory is 3% higher than last year. Is that really flush with unsold cars ?
Maybe I’m missing something here, but my definition of flush is quite a bit higher inventory bulge than 3% more.

Maybe you’ll get a marginally better deal but I wouldn’t expect fire-sale pricing.


#15

I mean, in the right circumstances certain loans can be beneficial if you are getting 0% financing and taking advantage of the free money elsewhere through some sort of investment, but otherwise it’s ridiculous to be financing for that long buying a car based on monthly payments instead of the bigger picture.


#16

Absolutely. If it’s a 0% loan, then sure. It’s a safe bet that not many of these loans fall into that category.


#17

The other thing to keep in mind is that unless you plan on driving the car into the ground, there’s a really good chance that you are going to be underwater on a term length that long.


#18

You can’t apply blanket statements like that.

For example, if you’re tier 1 credit and took an auto loan at 2.99% over a 66/72 month term on a 911, C63, honda civic/accord, toyota prius/camry, or any make or model that holds residual - you are matching the capital outflow and principal outstanding with the depreciation curve of the vehicle.

You could easily outperform that 2.99% APR, which is ~3.75% tax adjusted. For example, many real estate investments have a cap rate of 6-8% in which case you’d be downright silly to allocate your capital to paying down the principal on your car over other investments.

Historically speaking, if you were to just park your money in the SPY ETF over the 6 year term you would have come out WAY ahead of the majority of non predatory car loans.


#19

I feel like the article should go more in-depth into which brands etc… that would help with deal searches. Obviously some brands are less than 3% others a lot more.


#20

March might be the month of Chevy…not sure if you are into them :slight_smile: