What Happens To New Cars That Aren’t Sold?

What Happens To New Cars That Aren’t Sold?

What happens to new cars that aren’t sold?

Apparently, this question is not often asked. However, it bears importance because we deserve to know the fate of every vehicle that was never made out from their dealership.

Of course, we are aware of the fact that these dealerships won’t give these cars for free. There’s no way they will do that. They won’t put in an auction as well or something like a super discounted sale. The capital used in making these vehicles are not cheap, after all. One way or another, their manufacturers will try to get profits from them even if they are unsold.

The thing is, the process of how these unsold cars are being treated is quite complex. 

So what really happens? 

Well, allow me to remind you that these dealerships are franchises. From that detail alone, you are already aware of their entire operation. Basically, these dealerships buy cars from manufacturers. They are not distributed for free, which is the common belief of some people. They purchase these cars and trucks and will sell them on a higher price tag to attain a better profit. 

Needless to say, those vehicles that have been bought by these dealerships are theirs already. They have all the right when it comes to how they are going to sell or present this expensive merchandise. However, you have to realize that such an arrangement also prohibits these dealerships from returning their purchases to their manufacturers if in case they are not sold by the end of the year. Sure. They can try but for what purpose? They will not get a money-back guarantee here. 

At this point, these dealerships with few options of what they are going to do with their non-purchased vehicles.

  • First and the most plausible one is shipping the vehicles to a particular branch or place where it has a high demand. They have to contact one of their sister branches or dealership and ask if a specific model has a good market there. If the answer is yes, then a dealership will process the necessary documents for it to be able to ship the vehicle of interest. A trade could also happen, depending on how profitable these vehicles are in a particular place or region. I know the details are not exact, but that’s the idea of it.
  • Second, they can put it on auction. I know I said earlier that they wouldn’t put in an auction. But honestly, it is an option. Dealerships have the authority to sell their unsold vehicles in a given auction. However, this tendency is likely because of the fact this method will void some of their sales to the auction house. Just like I said, these dealerships want to maximize their profit. Any instance of slashes in the profit gain will be avoided by them at all costs. Technically, the dealership would lose a significant amount of money here. The car will be auctioned at a discounted price. Furthermore, the proceeds of the sale will not go to them.
  • The third option is utilizing the unsold cars as a type of loaner vehicle. Here, the dealerships will lend the said vehicles to their clients if the latter will bring their vehicles for maintenance and repair.
  • The last option would be putting the cars at a discounted price. Alternatively, they can also manipulate the prices and put some creative marketing to attract people in buying the vehicles. There are a lot of techniques being employed out there to ensure that these dealerships will be able to vanquish their stocks entirely. A good example would be these “zero down payment” promos. They can also put low or zero interest rates on their cars. Any of these approaches should work, one way or another.

By this time, you have an idea already about how these dealerships handle their unsold units. As you can notice, these dealerships still prioritize profitable returns even if the vehicles didn’t get sold in the first place. Noticeably, these dealerships will never let you feel or notice that they have declined in sales. They will never make a desperate appeal to you. It is one of the reasons why they can maintain their prestige. They can compel you that having a car is essential for you–which is not a lie by the way.