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  • Auto Sellers Inventory Question

    Posted by Dan from Madison on December 14th, 2020 (All posts by )

    I drive an Acura MDX and the dealership keeps sending me emails begging me to take a 2020 at a super duper deal. I am patiently waiting for the 2021 version to come out as it has many improvements, supposedly. I drive by the dealership on the way home and they have a LOT of 2020’s in their lot. Does anyone reading this know if the dealership actually owns that inventory or if it is consignment? Any way you slice it, that’s a lot of aging, expensive cars sitting around.

     

    8 Responses to “Auto Sellers Inventory Question”

    1. Mike Doughty Says:

      Dan, typically new cars are “sold” to dealers by the manufacturers on a system called “Floor Plan” that’s been standard for many years (since the late 60s, at least). The manufacturer’s finance arm loans the money to the dealer to buy the cars, they pay a small amount of interest each month that the car remains unsold , and then can return the car to the manufacturer after X number of months (depending on the plan) if they can’t sell it. Plans vary depending on the model involved. If you’re interested, there’s lots of information about it online.

    2. Dan from Madison Says:

      Thanks Mike I figured as much – we consign/floor plan equipment for our HVAC dealers as well. Acura at this pace will be getting back a LOT of 2020’s. At least from this particular lot.

    3. Mike K Says:

      I, for one, am not surprised that, as millions lose jobs, nobody is buying big ticket items aside from homes out of the city. The RE market is booming, I understand.

    4. Assistant Village Idiot Says:

      Late model used took huge price competition when Hertz went bankrupt and had lots of inventory to unload cheap. That affected the market both above them, in that getting “almost as new” now came cheaper or get “much newer than a beater” for almost as cheap.

      I recall from 2008 that one of the things that fell off a cliff for price was antique cars other than the absolute top shelf that the wealthy buy, so that Bentleys, Corvettes, and such could be gotten much cheaper. I don’t know if that’s true this time, but if you like that sort of thing it might be worth checking out.

    5. Philip Sells Says:

      I’ve been noticing the same sort of thing from my Honda dealer. My car is a ’16, fairly run-of-the-mill for the line. I can afford to buy new, but I still think that if I were to trade in for a ’20 now, it would be as if I had leased the ’16 at a rather poor price point, from a financial point of view. I feel for their predicament in a way, but I’d really rather wait at least another 2 years.

      It is an interesting point that you have, AVF. The ripple effects in the steel market would concern me.

    6. Dan from Madison Says:

      Steel is rocketing up, I can tell you that from the price increases I am seeing from my sheet metal fitting vendors.

    7. OBloodyHell Says:

      }}} I feel for their predicament in a way,

      NEVER feel for car dealers. They are not uniformly scum, perhaps, but they rival politicians and lawyers for innate scumminess. The shit they pull is not for the faint of heart nor those with a smidgen of empathy. Con artists are more trustworthy. A junkie’s word is less suspect.

      Grant them no shrift. They will do fine 5y from now, just as they did 5y ago. Any downturn is temporary and nothing of consequence to their living standards.

      Why am I thinking of Jack Warden’s evil brother in Used Cars? :-D

    8. Bill Brandt Says:

      I did learn an easy way to tell if the car has been in the inventory a long time is to see surface rust on the brake calipers.

      Yes, it is a flooring charge. Although I heard it was banks that held the inventory.

      Another thing I learned about car inventories is the danger of hail.

      I have a nephew who does this “PDR” – Paintless Dent Removal – and this is a huge industry. A hail storm hits a lot in the Midwest or south and it can damage 100s of cars on the lot.

      So these crews will come in for 100s of miles, and work on them for a few weeks. To the point of remoting headliners.

      @ OBloodyHell – I don’t have quite the cynical view you have about car dealers. Yes there are some shady and deceptive ones, but some good ones too. I feel for all the businesses these days. I have watched a restaurant owner friend struggle for 3 years trying to make a profit, Everytime she builds up a clientele, a new guvmint edict comes.