You’d be wondering what happens to those cars that never got sold at the dealerships. Do they just give out the unsold vehicles as a gift?
1. What is leftover car?
Leftover cars are those vehicles that are left unsold and yet are replaced by current new models. Now, if there are 2019 new models in the market and auto dealers still have 2016 models stocked up, don’t you think the 2016 models would be a serious burden to them?
Leftover cars are the result of remaining old car models even after the newer models have been launched
2. What causes a build-up of “leftover” cars?
It happens as a result of inadequate planning. A good number of times auto-manufacturers launch into building new car models as soon as sales of cars starts going down. This creates leftover cars as sales figure analysts and those in charge of planning factory production cycles may not see it coming and are unable to plan for it.
A decline in car sales might even be a result of some external factors like recession and increases in fuel price. However, this tends not to stop car production as it has been noted that shutting down car production is not good for a company and scares away shareholders. That is why you see these cars end up being bundled to the dealerships where they are left unsold for weeks and months.
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3. What do dealerships do with these leftover new cars?
Car dealerships are actually franchises, that is to say, they have the authorization of the auto companies to sell and distribute their cars. Hence, they buy these new cars directly from the manufacturers with the aim of selling them at a higher price to make a profit. Thus, once they buy the cars, it is automatically theirs. They have to get customers to buy them off as sending them back to the manufacturers is totally out of the picture.
Dealerships might have to crack their brains to come up with incentives that appeal to car buyers
Options open to them in cases of leftovers include:
3.1. Selling to auction
This seems like a popular option for leftover cars. It is a simple way that car dealerships take to mark leftover new cars off the book and create room for new models. However, the dealership stands to lose a lot of money from this, as the car would definitely be discounted.
The losses incurred by this means are usually much. Aside from the discount on each car auctioned, payment will also have to be made to the auction house for its services. It can be easily covered up when used cars are involved but it is just not the best option for new cars.
Car auction houses make a lot of money from car dealerships selling leftover cars
3.2. Discounts and generating incentives
Leftovers are technically the problem of dealerships but no auto-company would want their reputation to be dragged to the mud so they can help by creating incentives or improving on already existing ones that would motivate people to buy the cars. The dealerships can also help by talking to the customers and making the cars look appealing to them.
3.3. Using them as loaner cars
The cars can be put up to be used as service loans for customers to use while their own cars are being serviced. They can as well be used as employee cars for highly ranked employees.
The leftover cars might be an exotic deal in certain less affluent regions
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3.4. Exposing them to the right market
Another valid option is to ship off the leftover cars to a different market where that specific model is likely to be more in demand. For instance, a Honda Dealer in a city or urban area might want to trade his leftover old model with another Honda dealer in a smaller town that is in need of it.
Next News Networks shares insight into the world of leftover cars
Generally, buyers do benefit from leftover new cars. You might be surprised you would get a good deal on a car you never thought you could afford.