Ever seen a 2016 model vehicle being offered as ‘used’ on a dealer lot? Leaked internal memos from three big automakers give some insight into what’s going on…
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Business is booming, thanks in part to this plan to lift sales
The auto industry had its hottest year in 2015 after moving 17.5 million vehicles for a total of more than $500 billion in sales. This year looks like it could be another repeat. But amid all the growth, there are some trouble spots. We’ve told you before about what’s going on with subprime auto lending. Now there’s another report out about how certain manufacturers and dealers might be lifting sales.
The New York Times reports some automakers are apparently encouraging dealers to buy cars from their own stock and then turn around to sell them as ‘used’ even though they’re basically brand new.
Now, let’s be perfectly clear: This is great for car buyers if you can get your hands on one of these things. What’s slightly troubling is if these numbers are contributing to the red hot auto market. One memo obtained by the Times found that small dealerships might be able to boost their total quarterly sales by a third using this method.
Who’s doing this stuff? Three manufacturers in particular: BMW, Kia and Nissan.
For example, Kia in February allowed 755 of its dealers to buy up to nine vehicles from their own inventory and create a computerized bill of sale for each purchase — even though there was no customer. Those cars were then held for 15 days as test drive models, after which they could be sold as used with discounts of up to $6,000. That’s just one specific example from the New York Times article.
The bottom line: You may be able to steal a deal on select inventory from these three automakers if you can find these cars.
Sedans go unloved
Meanwhile, there’s another way you can steal a deal on a broader array of cars from a wider range of manufacturers right now: Simply buy a sedan instead of an SUV or crossover! With gas prices still low, people are more interested in larger vehicles than they are in smaller cars. That means dealers will be more motivated to move sedans and smaller cars right now.
Toyota is a case study of what’s going on. USA TODAY reports sales of the Corolla are down more than 7% this year, while Camry sales are down 4%. But the RAV4 crossover is up nearly 14% and the Highlander SUV is up 9%.
The bottom line: Sedans are going unloved right now and represent a great buying opportunity!