Of course I know about the “'04s must go to make room for the '05s!” stuff; what I wondered was what would happen if the '04 didn’t sell and was still around when the '06s or maybe even '07s were coming out; and, would a dealership ever get to a point where they’d stop trying to sell it. It seems like the answer is that, while rare, it’s not unheard of to be able to buy a new car that is several model years “old.”
I have heard the “car is worth lots more chopped up then sold whole” story any number of times, and I guess I believed it for awhile.
Then I got to thinking: Huh?
Why would anyone be selling whole cars?
Why wouldn’t I be buying whole cars off of lots and selling them for parts?
We know the market’s not flawless.
But if this old chestnut were true, some market forces, I’d have to think, would have intervened to either raise the price of whole cars or lower the price of chop-shop parts as the market was flooded by parts intentionally chopped by profitmongers.
A couple of speculations I’ve come up with that would help explain this dubious “fact:”
**The statement is meant to be [UNSPOKEN PARTS IN BRACKETS] – "When a car thief sells any given car part that he’s chopped, he may be able to do so at a price that, multipled on a pro rata basis for all the other parts, would lead to a total sum greater than the car’s value [BUT NO ONE CAN EVER SELL ALL OR EVEN MOST OF THE PARTS OF A CHOPPED CAR, SO MOST OF IT GOES TO WASTE];
or . . .
"When a car thief sells several chopped parts from a car, he may make more than he would make from selling the whole car [BUT THIS COULD STILL BE A SMALL NUMBER, MUCH LESS THAN THE RETAIL VALUE OF THE WHOLE CAR, BECAUSE MARKET PRICES FOR WHOLE STOLEN CARS ARE EXTREMELY LOW BECAUSE THEY’RE EASIER TO TRACE THAN PARTS].
Either of these possibilities would mean that no car dealer would find chopping for parts a very attractive option for surplus car inventory.
Or, the whole chop-shop-profit story is just made up.
But then I considered the car parts market. What cars need parts? Usually, cars that have been on the road for a while. The longer a car is on the road, the more chance it has to be in a collision or have a part fail. So, I reasoned, an older car might be worth more in needed parts than it would be worth whole.
Rocky’s Auto, a used care dealer here in Denver (can’t find a web site for some reason), has been advertising some new 04 Pontiacs at 1/2 the sticker price on the TV lately. Makes me wonder where they got them and how much they payed…
We bought a new car at a Toyota dealership last October. We got to talking to the salesman about how long cars stay in inventory, etc, and he told us this story:
GM makes as many cars as their factories can handle, and hopes they can all sell. There is a GM dealer in Houston, that is part of the same corporation where we were, that has, on its lot, over 20 2002 GM vehicles, and it “simply can’t sell them”. The discounts they were offering on the 2002s were still not enough to make up for the fact that 2003s, 2004s, and 2005s were also coming with deep discounts and special financing.
Presumably, someone would one day wander in and be happy with the deal he could get on the 2002. Or the car would be sold at auction.
Incidentally, according to Classic Motorsports magazine, the Mazda Miata (especially the older models) is a ‘future classic’.
Once upon a time, there were MGBs all over the place. In the 1980s you could pick them up in very good condition very cheaply. Nowadays, a fully-restored (concourse) chrome-bumper model will fetch prices in the high teens (Source: car auction lists I’ve read). Even restored ‘rubber-bumper’ prices are going up. (Still, the earlier-model chrome-bumper cars from 1962-1973 are more desireable.)
The Miata has been called ‘The MGB That Works’. It is very much in the spirit of the classic roadster, and it has superior Japanese engineering. Now might be the time to pick up a '91 or '92 Miata and restore it. It may not be worth much until a long time after production ends, but it seems destined to be a classic eventually.
In ‘98, when a crash forced us to shop for Mrs. Nott’s new car, a local Cad/Olds/GMC dealer showed us a nearly-3-year-old Oldsmobile that had never been titled. It was not a big enough bargain for us to buy it. Yes, it was brand-new, but the minute we drove it home, it would have been 3 years old. The price was not even enough to make up for 2 years’ depreciation.
We bought a '98 Pontiac Bonneville instead, which now has barely 50,000 miles on it.
In 1982, a local Chrysler dealership took a brand new Imperial and put it into storage. (It was a Chrysler Cordoba with a different grille and headlight covers and different taillights, and of course, “Corinthian Leather”.)
The car sat in storage until 2002 when they sold it as a new car for about $8000. It had never been titled and carried a 3 year/36k mile warranty.
Automobile manufacturers scale their production to match demand. If they all made “as many cars as their factories can handle,” the market would be flooded and prices would fall to rock bottom. Plus, automobile workers would never be laid off and we all know that isn’t true. And, if I lived in Austin and heard of a lot in Houston where 20 2002 models were available I’d make the trip and make a dern good deal. I doubt the salesman was being totally honest—I know it is hard to believe that a car salesman would tell a lie, but a few of them sometimes do.
I own a 2001 Dodge Conversion van that had never been titled. I bought it around Easter time of 2002. It came with a very deep discount and a full warranty. Plus, they threw in a new front bumper and a trailer hitch to sweeten the deal. It now has just under 17K miles and is clean as a pin and it is for sale—come to Seminole and I’ll make you a great deal on it.
All cars are sold. Flooring (or floorplanning) , mentioned earlier in this thread, is the loan the dealer takes out to have the car on their lot.
A dealer’s fiscal relationship with their casr is not unlike the relationship you have with your house. They are massively leveraged. They might take out a million dollars in loans for 50 cars, and their goal is to move those cars before they make too many payments.
Depending on the relationship they have with their lender they may be only paying interest on a vehicle, or they may be paying a portion of the principal too. So the longer the car is on their lot the bigger a drain it is on their finances.
Most dealers are extremely proactive about pricing vehicles to move. The sooner it goes the less interest to pay.
There is rarely any benefit to having a car on the lot for more than a month. (unless it is something that get’s customers on the lot to look around) This is why ordering a car tends to get better deals. The dealer assumes far less risk.