Today, 2016 new car inventory stands at 112,310.
At the current rate of sale, we will not sell through the new 2016 inventory till the last week of August.
Why this matters
Dealers always focus on selling their oldest vehicles first. This is because the majority of dealers floor plan their inventory.
As a vehicle gets older, the interest expense grows larger. Because of this, the oldest inventory always gets the prime real estate at a retail dealer location for maximum visibility. Newer arrivals are usually staged in lower customer traffic areas and not discounted as much in efforts to sell the oldest vehicles first. This method of inventory control works great as long as supply doesn't overwhelm demand.
Dealers always focus on selling their oldest vehicles first. This is because the majority of dealers floor plan their inventory.
As a vehicle gets older, the interest expense grows larger. Because of this, the oldest inventory always gets the prime real estate at a retail dealer location for maximum visibility. Newer arrivals are usually staged in lower customer traffic areas and not discounted as much in efforts to sell the oldest vehicles first. This method of inventory control works great as long as supply doesn't overwhelm demand.
More Supply Than Demand Is Our Current Reality
Here's a visual representation of this in action. On the way to a local park, I passed a dirt lot previously used as farm land now filled with cars. I looked at my wife and asked, "Did we just see that?" I quickly turned around to capture the image below.
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This happened because of greed. When they can sell a vehicle for 20 - 30 thousand but price them at 40 - 60 thousand causes the consumer to not buy new. They hold on to vehicles longer because they cannot afford the new ones. Cost goes up salaries go down expenses increase medical expense goes up. The rich gets richer and now they have to accept the results of their greed.
ReplyDeleteA new suburban is 60k easy! WHY SO MUCH
ReplyDeleteSome dealers stock up for build out that happens at the end of this month when the plants shut down for model changeover. Don't want to get caught with no inventory. Floorplan is the same per car per day, but they account the total interest into the base cost of the car. At the end of the model year most manufactureres give the dealer end of model payouts. Its not all doom and gloom.
ReplyDeleteIs that what is also being stored in the lot on Naylor Mill Rd across from National Vault?
ReplyDeleteYou can buy an old fixer upper home in some of the towns for the price if a vehicle new..pick home or car..Id go with home. Paid sixty for mine it's a four bed and 2 bath with attic and fenced yard..why buy a suburban when you can't live in t!
ReplyDeleteI think Pohanka Is storing about fifty cars currently at the new Delmarva glass location next to route 13 south...
ReplyDeleteThere is a 10-20k mark up on some these vehicles and people just are wising up to it. Who wants to finance a car for 7 years when its wore out by the time the note is paid?
ReplyDeleteOh! Oh, M G! The sky might fall! New models come out in September every year and every year there are leftover models! O.M.G! Every year since 1945 at least! This might be the worst sky falling since 1879! Maybe this will happen, maybe that! Maybe there will be a glut of rental fleet cruelly unleashed on the auto market! O.M.G! It's going to be horrific, maybe!
ReplyDeleteOr, it might resemble last year and be just fine, but we had to write SOMETHING for this summer's sales push...
They will just change a headlight or taillight and tell you the same car is brand new next year.
ReplyDelete