Sometimes, dealerships find it challenging to sell cars and therefore they stay for a longer duration with them.
Some dealers do not know whether they should keep their vehicles for a few days or months.
How Long Do Cars Usually Stay at a Dealership? According to our experience, cars usually stay at a dealership for almost 45 to 60 days. It is better to find suitable customers within 10 to 15 days to get a better profit margin, while you can wait for 2 to 3 months instead of selling them at a low rate. Many automobile companies move their unsold cars to auctions and ship them to other States with high customer demand for these models.
It is essential to know the time duration for an automobile to remain at a dealership to negotiate its cost. The dealers can try to deceive you by hiding the actual date of the vehicle’s entry into the lot.
Therefore, you have to know all the tricks to identify the methods by which you can check the exact date.
Why should a car not stay long at a dealership?
It is not ideal for the dealership to keep vehicles in the warehouse for long as it directly impacts their pricing.
Their rates can get lower after a few months compared to the new cars with the same models.
Therefore, they have to move the automobiles out of their inventory quickly if they want to get a better profit margin.
The prices for each model keep changing abruptly, so you have to sell them right after it becomes a part of the stock items to avoid the loss.
Moreover, the automobile companies get a loan to fill up their inventory and pay them back in installments.
They extract the installment amount from the profit; otherwise, their business would be at a loss.
They cannot pay the installments, and the interest keeps increasing when its overall rate goes down or remains for a long time in the showroom.
So, they try to free up their inventory to pay their loans on time to avoid the buildup of interest on the actual loan amount.
How long is a long time for a car to be on a lot?
The presence of a car in the lot for many months affects the sales as people would prefer to invest in newer automobiles instead of old ones.
Ideally, it should stay at a dealership for 10 to 15 days. However, it can exceed the duration from a few weeks to even months when the salesman does not find suitable customers.
They do not prefer to sell the vehicle by compromising on the profit and keep them until they get perfect buyers who pay a suitable amount for it.
Moreover, they wait for suitable buyers for almost 72 to 79 days, but the situation becomes serious as there are chances of going into loss.
Accordingly, they began to cut down the prices to get a minimum loss. I have worked in the automobile industry and know about their strategies.
They offer high rates at the start and gradually reduce them as time passes. The average time to sell a car is almost 75 to 80 days in Finland.
However, they apply different strategies to the unsold items of the inventory when it is present for more than 120 days.
What factors determine the stay of cars at a dealership?
Many factors determine the duration for a vehicle to stay at a dealership, including the type of automobiles or their makes and models and customers’ demands to get a vehicle for use.
Dealers try to sell these with a better profit margin, so they keep looking for customers who can pay them a considerable amount for their product.
They do not keep them for long when they find a suitable buyer and sell them quickly. This is because they know well that old modles get inexpensive over time.
They want to get a reasonable rate that meets the manufacturing cost and the interest ratio.
The customers prefer to purchase second-hand variants when they cannot afford the newer ones.
However, most of them want to get new vehicles as there can be some flaws in the older models which cannot provide them a smooth riding experience.
Time of the year
There are seasonal trends in the automotive industry, like all other sectors, that go on the peak at a particular time of the year.
They get more sales during the spring and fall, while it drops at the start of the year.
They go out to make purchases when the weather becomes pleasant, like in the spring when a slightly cool breeze blows outside.
Customer demand matters a lot in the car’s stay at a lot as the high-demand vehicles leave the lot quickly.
Some automobiles get out of trend when new models enter the automobile market and grab the attention of buyers. It diverts their interest from the older models to the newer ones.
The latest models with upgraded features are more in demand than the old classic ones.
Accordingly, the models of the automobiles strongly impact customer choice and affect the staying duration in the lot.
Depends on States
The demand varies according to each state, as some states have high selling ratios that have low demands in another part of the country.
In Kentucky and Missouri, Honda Civic and Ford Mustang are the slowest-selling vehicles, which take almost 109 and 121 days to leave the lot on average.
While Ford Mustang has high demand in Florida.
Moreover, Hyundai Elantra takes 69 days in North Carolina and 71 days in New York to get sold.
On average, the Toyota Corolla leaves the inventory after 118 days in Idaho, while it has high demand in Florida.
The prices of cars can be the reason for a long or short-term stay at the lot. This is because the expensive automobiles take more time to leave the inventory, while the same is the case for cheaper ones.
People consider cheap automobiles as low-quality vehicles which have lesser features as compared to the expensive ones.
So, the dealerships have to offer affordable prices to move them quickly as it can benefit not only the customers but the dealers can also get better profit.
What happens with the unsold inventory at car dealerships?
The dealerships have a lot of methods to deal with the unsold inventory, but they do not compromise on their profit and do not sell them at lower rates.
They send the vehicles back to the manufacturer when they do not find a suitable buyer. Moreover, they sell automobiles to wholesalers at reasonable prices.
Some dealers do not send their vehicles back and wait for days or months to get customers who can pay a suitable amount for them.
In addition, there is an option of shipping the unsold vehicle lot to the countries where these are in high demand.
They move the old models to the auctions, where they can find the best rates and get a customer who wants to pay the highest amount for them.
How do you know the time duration for a car to be present in the dealership?
Many dealers try to sell their old automobiles by replacing an old sticker with a new tag. However, some dealers are honest and inform you about the exact date of entry into the lot.
However, you can also find a fraud dealer who tries to hide the original date so that you can check the date by yourself.
Go to the automobile warehouse and avoid online purchasing to look at the condition. Moreover, ask them to show the invoice as the date is mentioned.
Additionally, you can look at the brake discs because they quickly rust within a few days and weeks. The corrosion on the brake discs indicates that it is not new.
Check the sticker on the driver’s door where the date is mentioned clearly. So, they cannot make you fool anymore if you know how to check the date.
What do reviews say?
I surveyed 869 dealerships to know the average time a car takes to be sold and whether they prefer to keep or sell them at lower rates.
Out of 869 people, 647 people (74%) said the cars take almost 45 to 60 days to leave the lot because they do not compromise on the profit margin and try to sell them at reasonable rates.
However, 163 people (19%) said their cars take 2 to 3 months to get sold, and they send the cars back to the manufacturers after 3 months.
While the remaining 59 people (7%) said people do not prefer to get vehicles older than 120 to 150 days, so they move their vehicles to auctions and ship them to countries where customer demand is high.
It is essential to sell the automobiles more than their manufacturing cost to avoid the loss so that the dealer can pay the loan.
“I do not prefer to sell cars less than their actual cost like our priority is to sell a car at almost $53,736 whose manufacturing cost is $47,982.”
Many automobile companies keep their inventories filled up for almost 2 to 3 months but begin to search for alternative methods when there are chances of abrupt price changes.
There is nothing better than finding suitable customers for a product, even from other states or countries, instead of selling them at a low cost.
One of the dealerships mentioned: “I used to ship my unsold lot to other States where these vehicles have high demand.”
Where does Carvana get the cars?