What Happens to New Cars that Never Get Sold ?



What Happens To New Cars That Don’t Sell? 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.

Millions of cars are produced every year, not every car is sold. What happens to them? They don’t give them away. If the price is reduced too much it reduces the sales volume of the newer more expensive models.

With each vehicle representing $30,000 or more in retail pricing, the typical dealer doesn’t want to keep these vehicles in stock. Brand-new cars, trucks, and SUVs that aren’t sold can’t just sit on the dealer lot forever; their investment in them is too high. It is natural for a consumer to ask the question, so what do they do with all those cars that sit and don’t sell?

0:00 What Happens to New #Cars that Never Get Sold
1:15 what happens to new cars that don’t sell
1:39 how the auto industry works
1:50 franchise law vs #Tesla
2:32 unsold or slow-selling cars
3:11 turning the inventory and floorplanning
4:04 how do deals sell unsold cars – deals
4:35 spiffs or special discounts
5:22 incentives and low-interest rates
5:40 loaner car and used cars
6:04 dealer trades and auctions
7:30 manufacturers with leftover cars – car graveyards
9:01 shrinkage
9:49 Bottom line
10:10 best deal on a car, truck, or SUV
10:40 questions and comments

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31 comments

  1. Omg last time i bought a car was 2005 lol
    I bought a benz that was a 2004 model & the dealer had it in the showroom, had 12 miles on it. I waited until the 2005 model year cars were coming in and the dealership wanted to get rid of all the previous year model. They gave me every incentive/discount and i paid cash. Now my car has 98K miles & still going strong. Im thinking once i hit 120K miles I'll get a new car.

  2. man ngl franchising laws seem suspect asf…protect the customer by what…jacking up the price?

  3. Wow Lauren, that's a lot of great info! Seriously, you answered so many questions I've wondered about, that I thought about busting out a paper and pen to take notes!
    I will be watching all of your videos and will check out your website and subscribe. I'm a car girl, and always enjoy this kind of info!

  4. I can't speak to Telsa since they sell direct to the customer and thought they don't build a car until its sold which is why the customer has to wait several weeks to get it after putting a deposit down. But as for the big 3, they do not just make cars that sit on their lot until they are sold to dealers. EVERY new car manufactured is already sold to a dealer before it is made. The manufacturer gives every dealer allocation for how many vehicles they will get. The dealer has to buy them. The manufacturer invoices the dealer about a week before the car is scheduled to be built. Every single new car manufactured is already sold to a dealer before it is built. When you see the manufacturer's lot filled with new cars sitting there, those are not sitting there because they are waiting to be sold to a dealer. They are sitting there because they are waiting to be shipped. If there is a problem with the rail cars or a problem with the car transporters, the cars will get backed up filling up the lot waiting to be shipped. We had times where we had to wait 3 months just to get a vehicle shipped out because of delays from the railroad or delays getting transporters to ship them.

    We never sold a new car at an auction. Every new car gets sold eventually, although it some cases at a big loss to the dealership. This is part of the reason dealers add a pack and roll to every new and used car they get. The amounts vary depending on the dealership. They will add a pack and roll to cover cost for advertising and to use money to write down their cost on old inventory they need to get rid of. So while a dealer may sell a car at a loss because it sat there to long, they really don't take a loss because of the pack and roll they add to every car. For example, we added a $100 pack on new cars and $300 pack on used cars. What that means is the dealer is adding $100 cost to every new car and $300 cost to every used car. When a car is sold that pack money is held in an account to be used to write down old inventory. If we had a car that was on the lot for a year and we had to discount it by several thousand just to sell it, that several thousand is taken from the pack money to write the value of the car down to sell it for the discounted price. The pack money covers the loss where the dealer won't actually take a loss.

    There are also auto broker companies out there who provide a service to dealers where they find dealers that need inventory and find dealers that need to get rid of old inventory and they put a package deal together to get the dealer needing inventory to buy several truck loads of inventory from a dealer needing to get rid of old inventory. These typically result in where the dealer needing to get rid of inventory will give up the holdback amount on each new car and the broker will either keep that as their commission for putting the deal together or split it with the dealer needing inventory. The only loss the dealer needing to get rid of inventory would be any interest they paid on the floor plan cost for that vehicle.

  5. So…if a millionaire came in and said I want 50 of last year's models would the manufacturer sell them or not once they sat in those grave yards?

  6. Great value in this video (and all your others!) Questions answered, no bs. Thank you for what you're doing.

  7. Didn't expect car saleswoman to provide the best example I ever saw of what Marx called overproduction under capitalism. What a waste.

  8. It seems to me that the logical thing to do is count how many of each model is in the graveyard and make fewer new copies of the most common residents of the graveyard.

  9. hello there There comes a time [ perhaps 100 days after the car arrives ] when the car dealer becomes desperate to move that unit out so that the slot can be filled by a newer, more fashionable vehicle.

  10. Its greed manufacturers never want to lose they rather let new cars rot instead of giving poor familys who have no vehicle

  11. Honda Civic in 2022 is starting a new model so any left over 2021 especially at the end of this year may be a bargain, however maybe Honda planned for it.
    It might work better for a model that is being discontinued altogether like the Lincoln sedans.

  12. What would be more helpful is if you explained to us how to take advantage of this with 3 examples.
    e.g. February 2021.
    Go to dealer web sites….see if they have any 2020 cars.
    Look at internet sales price.
    Car 1. Japanese sedan that doesn't sell so well e.g. Avalon
    Car 2. American car that does not sell so well,
    Car 3 German car
    Perhaps pick some examples of models that are being changed for the new year, so previous model is sort of shunned
    Thank you.

  13. Wonderful presentation. I bought a 2019 Lincoln MKT crossover with 8k for 31k. Fully loaded with EcoBoost 365 hp. Was a dealer demo sold by a Massachusetts dealer to a NY dealer. 57k MSRP! Excellent value..

  14. INFINITI car lots are full of “dogs” right now. Their sales have been abysmal for several years now.

  15. Show me one of these graveyards… Been a new car manager for Chevy for 5 years and I have never seen or heard of much less needed this?

  16. I’ve mistakenly thought until now unsold inventory went to fleet sales and rental car companies

  17. I wonder what's the 'oldest' new car you can find on these lots…2015?? 2010…..like a time warp…

  18. I guess my dealer loved me…I bought a 2020 Tundra in June 2020…I had to wait for it to be built…got it in August 2020.

  19. Off to auction house ?
    Eventually, there will be no more dealerships……..they insult consumers intelligence, playing the salesman game………and there are too many employees at dealerships.

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