What happens to all of the unsold cars?
If you’ve ever driven by a car dealership and seen the rows and rows of brand new cars, you’ve probably wondered what happens to the ones that never get sold. Where do they all go when it comes time to make room for the newest models? Dealerships won’t just give the cars away for free, though. Things are a little more complicated than that. (You’ll want to read up on these secrets that car dealerships won’t tell you.)
Car dealerships are franchises. That means they buy new cars from the manufacturer and sell them at a higher price to make a profit. Therefore, once the dealership buys those cars, they belong to them. They can’t just send the unsold ones back to the manufacturer at the end of the year. In order to make money, they have to get customers to buy them.
There are a few options for the dealership when their cars don’t sell. They can ship the unsold cars to a different market where the specific model might be in demand. “For example, a city Toyota dealer with a Toyota pickup may trade it with a small town Toyota dealer who needs it,” George Iny, president of Automobile Protection Association told The Globe and Mail.
The cars can also be sold at auction, but that forfeits some of the sale to an auction house, which means the dealership would lose a lot of money since the car would already be discounted. Another option is that the cars can be used as a loaner car when people bring theirs in for service.
The final option is to price the cars to sell. Something to keep in mind when buying a car is that carmakers and dealerships want to get rid of inventory so older cars aren’t competing with newer models. Iny suggests purchasing a car in the fall because that’s when dealerships push to get last year’s cars sold.
So, all of the unsold cars can actually benefit the buyer, but before you go to purchase a new set of wheels, make sure you know how to outsmart a car salesman.