The longer a vehicle remains on a dealer’s lot, the more money it cost the car seller. Dealers will naturally be more willing to wheel and deal to get rid of their old inventory. Why does it cost the dealer more to keep an old vehicle in inventory? How does the consumer know the age of the vehicle? Read and find out the answer to these questions and how to get the best deal on aging inventory.
The Cost of Aging Inventory to the Auto Dealer
There are several reasons why aging vehicle inventory costs the dealer money. One of the biggest reasons is the majority of new vehicles on the lot are financed. The automotive industry uses the term “flooring”. When a car is floored, the business has to pay interest on the vehicle. The longer the vehicle is floored, the more interest the dealer has to pay.
Another factor is the cost of real estate. Vehicles take up valuable space and many dealers have facilities in very expensive real estate markets. Aging inventory takes up space that can actually be used for inventory that has a better potential for a more profitable sale.
Factory Incentives for Moving Old Car Inventory
Car manufacturers know that dealers that have a lot of inventory of old model vehicles are more reluctant to order new models. In order to move the older models, vehicle manufacturers will often give incentives to the consumer in order to move the older models. Some of the typical incentives may include
- rebates
- lower financing rates
- lower cost or no cost upgrades
- additional or extended warranties
- skip monthly payments
The best time of the year for incentives on older models is when the majority of the new models come out. With some exceptions, the majority of the new models usually come out in the late summer months.
How to Find Out the Age of a New Vehicle
Normally when new models come out, the dealer will have some inventory of the older models. For example if the 2013 models hit the dealer’s lot, look for 2012 vehicles of the same model. Chances are the dealer is more willing to deal on the 2012 model to make room for more 2013 models. Ask the dealer if the factory has any incentives for the older model.
Another method that gives a good indication of the age of a vehicle is to determine the production date. The production date is when the car actually came off the assembly line. On the inside of the drivers door jam, look for square sticker. The sticker will give various types of information like the vehicle identification number, trim codes and exterior paints codes. In the upper left corner of the sticker you’ll find the production date.
In a nutshell, when looking for a good deal on an older new car, ask the dealer if the factory has any incentives. Look for models that have been on the lot for an extended period of time. Last but no least, don’t take the dealer’s first offer. Always ask for a better deal.
James Clausen - Clausen received a Bachelors Degree in Business Administration in Automotive Management and Marketing at Northwood University, graduating ...
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