How Car Companies Clear Their Extra Inventory - Parentology

How Car Companies Clear Their Extra Inventory

by Colby Scott

The pandemic has forced a lot of companies to quickly pivot in order to save themselves from going out of business. The automobile industry has been hit especially hard — but that situation can also spell big savings for consumers, making right now a great time to get a new, totally loaded car, truck, or SUV. 

It’s no surprise that this happened. Americans have been driving less or simply wary about going to big dealerships to haggle over a new vehicle. However, manufacturers already had their inventory in production for the sales they had projected. The result is rows and rows of sparkling new SUVs, cars, and trucks sitting at assembly plants and dealership lots waiting for new owners who may never arrive.

How bad is it? Car and Driver reports that Ford had a quarterly decline in U.S. sales of 39%, General Motors had a decline of 34%, and Hyundai saw sales drop by 18%. That, of course, means there are deals for consumers looking to purchase a new or barely used vehicle right now. 

How Car and SUV Sales Work

unsold car inventory sale

First, it is important to know how these sales work. Manufacturers sell vehicles to dealers — not directly to the general public — and those dealers don’t really “buy” those vehicles with cash; they finance them through their bank. This means that every day those vehicles sit on the lot, the cars, trucks, and SUVs are both depreciating in value and the dealer is paying interest on those loans.

Needless to say, if dealerships can’t pick up their sales, they could lose significant profits. This is especially true when the vehicle is loaded with the latest sound system, lighting, navigation, upholstery and other bells and whistles, because they invested a lot of money hoping for a higher price tag that night never come. That means you can likely buy a brand-new, top-of-the lines vehicle at a significantly lower price.

How Car Dealers Sell Unsold Inventory

Here are some tricks dealers use to sell off that excess inventory. 

Offering Salespeople Special Cash Incentives
Watch where the sales people are directing you. If you want an SUV and they aim you toward some specific models, know that they are motivated to clear them out. 

Larger Discounts on Slow-Sellers
Ask your salesperson if there are special discounts being offered on slow-selling vehicles. Let them know you’re aware that larger discounts are offered on select vehicles the dealer wants to clear out. If the salesperson knows you’re serious about buying, they’ll help because it benefits everyone.

Ask for Manufacturer Incentives
Manufacturers offer incentive programs like cashback offers, special subsidized lease deals, and zero-percent or other low-interest-rate financing deals to help dealers clear their lots. Again, if the salesperson knows you’re hot to buy, they will help you out.

Checking the websites of dealers in your area will often tell you if there are dealer or manufacturer discounts available, but it doesn’t hurt to ask as well. 

Look at “Nearly New” Used Cars
Slow selling cars are often turned into loaner cars for the service department, or as everyday transportation by dealer personnel. As JD Power explains it, “By doing this the dealer is transforming the slow-selling new car into a nearly-new used vehicle that will then typically be sold at a substantial discount from the manufacturer’s suggested retail price.” 

So don’t get hung up on the “used” title. If you like the car or SUV, the mileage is low, and there’s a dealer warranty, you could score big.

Check an Auto Auction  
This won’t necessarily help you at the dealership, but investigate auto auctions in your area. Dealers often use these to clear out vehicles that aren’t selling on the lot.  

Know This Before You Buy

As the number of available new cars and SUVs continues to increase, buyers will have more choices than ever before. Plus, incentives are growing, giving you a chance to get a considerable discount on the new car or SUV of your choice.

Here are the most popular new and used cars, trucks and SUVs of 2020. This information from iSeeCars is helpful when seeing what sales or discounts dealers are offering.

Most Popular Used Vehicles in the United States

  1. Ford F-150
  2. Chevrolet Silverado 1500
  3. Ram Pickup 1500
  4. Ford Escape
  5. Nissan Rogue
  6. Honda Civic
  7. Toyota Camry
  8. Chevrolet Equinox
  9. Nissan Altima
  10. Nissan Sentra

Most Popular New Vehicles in the United States

  1. Ford F-150
  2. Chevrolet Silverado 1500
  3. Toyota RAV4
  4. Honda CR-V
  5. Ram Pickup 1500
  6. Hyundai Tucson
  7. Honda Civic
  8. Toyota Camry
  9. Chevrolet Equinox
  10. Toyota Tacoma

Find Your Dream Car at a Price You Can Afford

You can expect incentives and deals to only get better as new cars and SUVs sit unsold for more extended periods of time. But, to take advantage of them, you should first do a search online of the cars, and the available incentives in your area.

Finally, don’t rush it. With automakers and dealerships competing for your business, you should take the time to compare prices and incentives. See what different dealers can offer you – and where you can find the best savings. 

A simple online search will give you great info before you leave the house. And, once you’re armed with some simple knowledge, getting the car of your dreams should be easy.

Car and Driver