This Is What Happens To Unsold Cars At Dealerships

Have you ever wondered what happens to unsold cars while driving by a car dealership and seeing the rows of brand new cars? After all, they need to go when it comes time to make room for the newest models. As you have guessed it, dealerships obviously won’t just give them away for free. Read on to find out what happens to new cars that don’t sell plus useful tips for when you go buy one of these vehicles. 

What Happens To Unsold Cars

What happens to unsold cars is an interesting industry knowledge that may benefit you when purchasing a vehicle. First, you need to see things from the perspective of the dealership. Car dealerships are franchises, which means they purchase new cars from the manufacturer and sell them at a higher price to make a profit. 

Here, you might wonder if it’s possible or legal to buy a vehicle straight from the manufacturer. Technically, you can. In fact, about 15% of all buyers special order their vehicles, but you can’t actually order a vehicle yourself. You still need to do it through a dealer.

Why though? Because all of the car dealerships in the US got together and lobbied for that law. Under the law of the US, it is illegal for a car manufacturer to start their own dealership or sell directly to the consumer. 

Therefore, once the dealership buys cars from the manufacturer, these vehicles belong to them. This also means that dealerships can’t just send the unsold new cars back to the manufacturer at the end of the year. There are a few options for a dealership when it comes to new cars that don’t sell by the end of the year. 

Keep As Loaner Cars

The first option is for the dealership to keep some of the unsold new cars so they can be used as a loaner car when people bring theirs in for service.

Sell Them Elsewhere

A dealership can sell a specific model that can’t sell to a different market where it might be in demand. For example, a city dealer with a Jeep pickup may ship it to a small town dealer who has customers asking for it.

Sell At A Discount

Dealerships want to get rid of inventory so older cars aren’t competing with newer models, so another option for the dealership is to price the cars at a discount to sell them off to make room for new models. This opens an opportunity for people looking to get a good deal, and the best time to hunt for a new car with a good price tag is in the fall, because that’s when dealerships push to sell off last year’s cars. 

Sell At Auction

The cars can also be sold at auction, but in this case, the dealership has to forfeit a fraction of the sale proceeds to the auction house, and this fraction is not negligible. The car would always be discounted by quite a lot, so the dealership would lose a lot of money. 

READ MORE

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Before You Go And Buy One Of These Unsold New Cars

If you set out to buy a discounted new vehicle in the fall, there are a few things you should keep in mind to get the best deal possible and not getting outsmarted by the salesmen.

Do your homework

Always do your research beforehand. Know the specs of the models you’re after and browse in-depth reviews from owners to get an idea of what you’re getting yourself into. This allows you to ask informed questions when meeting the salesmen too. 

Drop by on a weekday

The best time to schedule an appointment or drop by your dealership is a weekday. Even if you can only go on the weekend, it’s always better to make an appointment If you want to take test drives or ask several questions. Also, don’t show up too late before the dealership closes, when the salespeople are trying to get home and might not be very attentive.

Get every promises in writing

It’s common for the salesperson to promise buyers different things to get them to sign the contract. You should get a written proof of whatever offered that’s important to you, otherwise, you only have a verbal commitment that the salesperson later may claim not to remember.

Read the contract at least twice

Read everything at least twice before you sign the contract. If possible, have someone more experienced to give you some advice as to what you should pay extra attention to. It’s quite common for inexperienced and/or careless buyers to have extra expenses added, such as extended warranties, credit insurance, and other profit generators.

Review and test drive

Before you drive the newly purchased car off the lost from the dealership, always  have someone review how everything works and if possible, test drive. As different models might differ slightly, before you drive it off, make sure you know the absolute basics then and there, like how to deploy the emergency brake or where the gas tank is located.