How Do Car Dealers Get Rid of Their Unsold Inventory?

One of the biggest unsolved mysteries is what happens to the cars that dealerships don’t sell?  It would be great if dealerships gave those cars away for fee, but of course they can’t do that.  So where do these cars go when its time to make room for the newest models?

You may think that dealerships just send unsold cars back to the manufacturer, but that is not possible.  Car dealerships purchase the cars on their lots from the manufacturers and then they sell them at a higher price for a profit.  So once the dealership buys the car from the manufacturer, it belongs to them.  They have to figure out a way to unload the inventory without incurring a loss.

So what do dealerships do with their unsold inventory?  Dealerships have four options on what to do with their unsold inventory. They are:

Ship To Other Dealerships

Lots of times, other dealerships that have more of a demand for a certain car.  Dealerships who have an overstock of that car can ship it to the dealership that has demand for that car.  This way there is no money lost.

Dealerships need loaner cars.  They provide them to customers who bring in their cars for service.

Pricing a car to sell is not what any dealership wants to do.  This basically means that the dealership is selling the car at a loss.  Dealerships do this so that newer cars are not competing for attention with newer cars.  For dealerships this is not an ideal situation, but for car buyers this is the best time to buy.

Auction house

The unsold inventory can be sold at an auction.  The dealership will have to discount the car for the auction and then pay the auction house.  This means that the dealership would lose money.