By on September 4, 2018

Spring might be a time of renewal, but fall is generally when old gives way to new on dealer lots. Not necessarily, though. If the “new” 2017 Fiat 124 Spider I recently spotted against a backdrop of 2018 Ram 1500s on my local FCA lot is any indicator, some brands have a tough time turning over a new leaf, so to speak. (Fiat’s problem is especially grim compared to other brands.)

Bloated inventories, scattered new model introductions, and a fickle buying public have made “new car season” less apparent than ever, and the problem seems to be growing worse.

According to Bloomberg, data from Edmunds shows a rising trend of old vehicles lingering  on lots past their model year, creating a problem for those tasked with selling them.

In the fourth quarter of 2017, just 46 percent of new cars sold in the U.S. were new 2018 models, compared to 73 percent in the same quarter, 2007. Data from the first quarter of 2018 showed roughly 20 percent of new car sales involved a 2017 or 2016 model.

Though many automakers, including GM, have made efforts to lower their bulging inventories (Kelley Blue Book’s last check showed the industry at 66 days’ supply, down 3 days from last August), the industry-wide average remains higher than in the years following the recession, when a rising tide of American buying public stormed anxious dealerships in search of vehicles. New vehicle sales have plateaued, with analysts projecting fewer sales in the years to come. Still, projections are hit and miss. While Edmunds and Cox Automotive predict a better August than last year, we won’t know if that truly was the case until sales figures roll in later today.

Edmunds analyst Ivan Drury feels automakers haven’t yet received the message. “I don’t think they understand the gravity of the situation,” he said. “This is becoming a chronic, real issue.”

Dealers take a hit when left with old stock at model year turnaround time, especially if the newer vehicle is a refreshed model. The old vehicle eats up a spot on a lot that could be occupied by a more desirable vehicle that would sell in less time, and at a higher price. Dispatching old stock traditionally means big, big incentives. And that price tag lures eyes away from the newer, often unchanged models next to it.

Last December, roughly 20 percent of Nissan sales involved a 2018 model. The automaker resorted to throwing incentives at dealer sales staff in a bid to move the old metal. Interestingly, around the same time, Nissan declared an end to the long-held practice of chasing sales targets, later slashing incentives on its vehicles in an effort to boost profitability.

Across the industry, Audi and Subaru keep the trimmest inventories, leading to less model year overlap in late fall. Elsewhere, there’s the potential for big savings as desperate sales staff get ready to play Let’s Make a Deal. This author’s father once made a $4k profit trading in a two-year-old Jeep Patriot on a new, higher-trim model.

You have to wonder what that ’17 Spider ultimately sells for…

[Image: Nissan]

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65 Comments on “Do You Have to Let It Linger? Dealers Struggle With Old Stock During a Season of Renewal...”


  • avatar
    FerrariLaFerrariFace

    “You have to wonder what that ’17 Spider ultimately sells for…”

    If it looks like this one, they might have to throw a little more cash on the hood.
    https://www.cars.com/vehicledetail/detail/703771908/overview/

  • avatar
    IBx1

    New car prices follow inflation

    Wages do not follow inflation

    Older cars from at least the mid-’90s are extremely reliable

    Older cars were built when wages stopped growing and are affordable

    • 0 avatar
      ScarecrowRepair

      That doesn’t make any sense — do you really think wages haven’t kept up with inflation? The problem is there are two inflation measures, price and wages, and they are not in sync. If you measure inflation instead by how many hours of work it takes to buy something, it has gone way down even in the last 20 years, and the products you buy today either weren’t available then or are so superior nowadays that the comparison falls apart because no one would buy such junk now. Start with computers and cell phones, but it even works with cars.

      There are always some people who would love to buy something old (I’d take a 1986 MR2 if they still made them new), but the vast majority of people would not.

      • 0 avatar
        PrincipalDan

        Reminds me of an old Farmer my Dad knows who measures the price of a bushel of wheat by how many it takes to buy a low priced new car. This is because in the late 60s he bought a new Corvair by selling X bushels of wheat.

      • 0 avatar
        Garrett

        It makes a lot of sense, because you’re forgetting something: credit.

        The more readily available credit is, the larger the buyer pool becomes. This causes inflation for certain goods.

        College education. Homes. Medical care. Automobiles.

        All of these are things where there is the ability to engage in a large purchase without needing to have much in the way of wealth.

        Easy credit means there’s more demand, which raises prices – which creates a feedback loop.

        The housing market crashed because credit tightened quite suddenly in response to increasing delinquency rates.

        As an economy, we’ve moved from using wealth to help purchase large items to using income to obtain credit. Leasing and subscription models are the ultimate expression of this idea.

        • 0 avatar
          Cactuar

          You hit the nail on the head Garrett.

          • 0 avatar

            Yes, x2 Undergrads with $240k in student loans ? 84 month payments for a pickup truck ? All due to cheap, or in the place of student loans, debt bondage credit, without which, the products in question would be less expensive.

        • 0 avatar
          forward_look

          With interest rates now climbing, the near future looks worse for sales.

          • 0 avatar
            Garrett

            Well, there’s still a square on the 4 square to manipulate: time.

            Take maturities out farther and you can solve for that payment.

            Of course, that leads to people being underwater longer on their cars, which means you steal today’s sales from future years.

    • 0 avatar
      jalop1991

      @IBx1: “Older cars from at least the mid-’90s are extremely reliable”

      In what way?

      http://www.foxnews.com/us/2018/09/01/wrong-way-head-on-crash-on-indiana-highway-kills-4-police-say.html

      That Jeep SUV is WAY newer than the mid-90s, and its roof folded like a cheap suit.

      Enjoy your old car ride.

      • 0 avatar
        Erikstrawn

        In what way does a Jeep folding up in a crash demonstrate reliability? Buying an older car is no guarantee you will be dying a gnarly death in a crash. Check your local listings and you’ll find a large number of older cars with reasonable mileage and plenty of life left for around $2000. It’s a buyers’ market right now, and there are going to be a lot of cars withering on the dealership vines.

        • 0 avatar
          forward_look

          I look at our 11 year old car and ask what’s different from a new one.

          – electric steering
          – lots and lots of gadgets that I don’t need
          – backup camera
          – large car payment

          • 0 avatar
            IBx1

            @jalop1991, both drivers died and that’s a head-on crash at highway closing speeds. Show me any car that survives that; I said reliable.

            @forward_look, that’s exactly it. Don’t forget all the twisted and tortured sheetmetal that’s desperate for attention versus the clean and sharp lines that most cars had before 2012.

          • 0 avatar
            forward_look

            And for a nav system I’ll just use a phone with Here We Go on it. Updated regularly, for free.

      • 0 avatar
        SPPPP

        Jalop1991, it seems pretty tasteless to cherry-pick some family’s tragedy to make this vague point.

        Besides that, it doesn’t even tell us much. All the people (1) in the new RAV4 died. Only half (3) of the people in the “old” Jeep died. Does that make the Jeep “infinity percent” safer?

  • avatar
    CaptainObvious

    Yes – this – exactly.
    My local Ford dealer has 2017 Fusion Sport still on the lot. Marked down on their website – but is it a good deal?
    Who knows?
    I can’t find any pricing on-line for a NOS 2017 Fusion Sport. All the calculators for 2017 cars assume they are used or CPO – and need a mileage entered – you can’t enter 0.
    And if you enter 1 – then you have used car and not a new leftover.
    Very frustrating.

    • 0 avatar
      Lie2me

      Doesn’t calling them “Demos” get around that problem?

      • 0 avatar
        CaptainObvious

        It might – for the dealer.
        But I’m trying to figure out what a good price is for a 2017 Fusion Sport – that never was titled, etc.
        Can’t find one.

        • 0 avatar
          PrincipalDan

          A “good” price is one the market will bear.

          However, if you show interest and there hasn’t been much interest shown the dealer would be an idiot not to negotiate aggressively.

          However many dealers are in fact idiots and cannot see the ink they are bleeding with a vehicle that has been tied up in the floorpan that long.

          • 0 avatar
            ernest

            Yes… and no. The floorplanning is an expense, but once the vehicle gets sold at a loss, it then becomes a large hit as opposed to a monthly write-down. Considering managements pay plan is determined by profit/loss of the department, what would the guy whose paycheck takes the hit rather do? Hang on and hope for more money, or turn a theoretical loss into something very real on the Doc at month end?

        • 0 avatar
          Middle-Aged (Ex-Miata) Man

          A quick search on Cars.com indicates greater than $10,000 in depreciation from MSRP on a used 2017 Fusion Sport with less than 20K miles.

          My suggestion is to find the lowest-mileage used example you can for your area and make that vehicle’s price your initial offer on the leftover 2017. Sure it’s low, but you’re also dealing with a vehicle the dealer should be desperate to sell.

          That said, a twin-turbocharged Ford that’s been gathering dust on a dealer’s lot for a year (at least) could be more problematic than buying an equivalent used vehicle on CPO…

  • avatar
    sportyaccordy

    I mean, do they have a choice?

    I recall a similar story about FCA dealers essentially converting 200s from new to used to get them down to a price the market would bear. I get the feeling its a lot uglier out there than we realize for a few brands.

    The problem comes back to the product. I imagine most people buying new Sentras and the like either can’t or don’t shop around. All of these brands “technically” compete but the customers are very, very different

  • avatar
    dwford

    What happens is is that at a certain point in the incentive cycle, the manufacturer gives the dealer a lump sum final incentive on the old car, then basically tells the dealer they are on their own with it. So the car keeps collecting dust, while the dealer goes through the stages of grief while they decide how much to lose on the car to get it to go away.

    • 0 avatar
      TDIandThen....

      The 124s have $4500 cash on the hood at the moment and have most of this year. They haven’t moved this year (in Montréal) much at all. I guess the step of acceptance is to arrive this Fall for the convertible? Will be interesting.

  • avatar
    TDIandThen....

    Extremely relevant, thank you. I’m waiting until October to ask for prices on a Fiat 124, again. Dealers here in Montreal have been completely unwilling to move on price this year, even though it’s a year-old model. I assume that’sbecause of orders from FCA (aka N American sales strategy) behind their uniform resistance.

    If I can’t get a much cheaper 124 I’ll probably go with a Porsche 944…the new car would be nicer but not $20k nicer.

    • 0 avatar
      TMA1

      Having driven the Abarth 124, my first thought was that my NC Miata was far superior. Find one lightly used, then you’ve still got a roadster that will last for years while giving you very little trouble (unlike an old Porsche).

    • 0 avatar
      JMII

      I assume sales of Fiat 124 in Canada completely disappear in winter. They gotta be willing to deal on a small, RWD convertible when its freezing out.

    • 0 avatar
      slavuta

      TDIandThen,
      Go get Miata NOW! $4000 on the hood. hurray!

      • 0 avatar
        TDIandThen....

        Thanks youse, I’ve looked at the mx-5 in both NC hard top and ND and just don’t love it. Maybe because im coming from diesel but I find the real lack of torque (mx-5 feels gutless to me) and the road noise (mx-5 is noticeably louder)…insurmountable. I actually prefer the highway ride of the 124, the slightly quieter cabin, the turbo weirdness, and the thousands of dollars less of the Fiat. The only real negative is the FCA dealers are not…ideal.

        Right now Fiat is offering $4500 off the 2017s. I also have access to a friends and family discount but I assume that will be irrelevant to most dealers after I ask for 35% or whatever off.

  • avatar
    mechimike

    Just picked up a 2018 Mazda 3 Sport Hatch for $4k+ off MSRP. Dealer was visibly happy to see it gone. That was like 20% off.

    • 0 avatar
      slavuta

      Same here (Last year). Showed up at Mazda on a Labor Day… rest is history. Paid just a bit over $18K for ‘6. A lot of car for money.

    • 0 avatar

      I nabbed a 2018 3 Grand Touring hatchback (manual) at the end of June and got $4000 off with very little effort. It had been sitting for almost a year and like you, they were quite happy to see me drive it away. Hell of a lot of car for $22k.

  • avatar
    SaulTigh

    Just read this morning that the electronics manufacturers have bloated inventories right now that have not been this big since the Great Recession days. I wonder if this presages things to come, but so far it seems people just can’t stop buying new vehicles.

    I for one have lived most of my post-schooling adult life in a low interest rate environment as I was only out on my own for about 2 years before 9/11 happened. Since that time I’ve had auto loans at 2.99% (60 months) and 1.94% (75 months). My 30-year mortgage is at 3.375%. Early on, I routinely played the credit card transfer game with 3% transfer fees often netting me another 18 months at no additional interest.

    This is all to say that I’m less than enthusiastic about signing up for a car loan at 5-6%, or even a mortgage at those rates should they climb that high. I wonder what the pain point will be for most people?

    This is all to say that I’m not anxios

    • 0 avatar
      IBx1

      I think that’s more because there’s no good reason to buy new tech if you have anything newer than 4 years old. They’re loading up everything with bloat and subscription service fees, and there’s no reason to buy any iPhone after the SE unless you want the look of the iPhone X. Same with Android phones; what’s the actual difference after a Samsung Galaxy 5 besides the exploding batteries?

      • 0 avatar
        sportyaccordy

        You sound like one of those people who only uses their phones to make phone calls. There are plenty of reasons to get newer phones.

        – Better cameras
        – Better multi tasking performance (i.e. anything Android Auto related, running multiple apps simultaneously)
        – Better gaming performance
        – Better network performance (from newer modems + better data throughput)

        And the most obvious one…. bigger and better screens. A 4″ 640p screen? Gag me with a spoon. I watch a good bit of video on my phone and that’s awful. I’ve personally found anything beyond 1080p to be overkill though, with regards to battery life and overall performance.

      • 0 avatar
        jalop1991

        @iBx1: “what’s the actual difference after a Samsung Galaxy 5 besides the exploding batteries?”

        My God, man, the cellular frequencies.

        T-Mobile is moving forward yearly. When you say “my service sucks,” much of what you’re saying is “my phone is older”.

        Verizon is shutting down older voice service next year–they want to move everything to VoLTE.

        For better or for worse, the cell phone industry is NOT at the point where you can just sit on the device you have.

      • 0 avatar
        Dan

        “… what’s the actual difference after a Samsung Galaxy 5 besides the exploding batteries?”

        Glass backed bodies that crack if you look at them cross eyed, curved screens that don’t work with glass protectors, batteries that can no longer be replaced, oversized form factors that no longer fit in a pocket, and a $50-100 price hike with each subsequent generation.

    • 0 avatar
      mechimike

      Just got a new car note a few weeks back for 2.49%. But they are inching up.

      • 0 avatar
        jkross22

        Yeah, got quoted 1.99% (These dealers have no balls…. just call it 2%) at a Mercedes dealer for a cpo car. Lease returns appear to be hurting resale value of the ML350.

  • avatar
    Gardiner Westbound

    I’m a “keeper” who holds a car for the long term. I target a discontinued model or one that will be replaced with an all new design: high quality, good reputation, proven powertrain and heavily discounted price. What’s not to like?

  • avatar
    PrincipalDan

    https://www.ricoautocomplex.com/VehicleSearchResults?search=new&year=2017

    Well it does help if you will actually price them like you might want to sell them…

    As far as I can tell my local Buick GMC dealer seems to have little interest in getting rid of his almost 2 year old new models (2019 models are starting to hit lots now.)

  • avatar
    HotPotato

    I have seen a brand-new 2014 Fiat 500L in dealer inventory. It’s not rocket science, dealers: if you want to sell it, discount it. UP FRONT. In the advertised price. Not “we’re dealing, come on down.” With the exception of the TTAC Dealer Haggling Self-Gratification Club (membership: 6), people hate that crap.

    • 0 avatar
      PrincipalDan

      My FAVORITE (eye roll) is when you go to a dealer’s site and the “Dealer Price” lists every conceivable discount including ones that could never be combined (i.e. – I can’t take the lease discount and the purchase cash, doubt I’m going to be a veteran and a student and a member of the national association of relators…)

      Dealer – if you play those games where any idiot can see it on the web, I’m not even emailing/calling/darkening your doorstep.

  • avatar
    RSF

    There’s really no reason any dealer should be holding a unit for a year. Price it right for a retail customer or wholesale it. Just take the hit (it will be worse later) and move on.

  • avatar
    slavuta

    “You have to wonder what that ’17 Spider ultimately sells for…”

    Well, Miata has $4000 on the hood. Bad part is that 2019 has updated engine…

  • avatar
    stingray65

    I was helping a friend buy a car recently, and we were looking at the “usual” prestige brands: MB, BMW, Audi, Lexus, and it was amazing how many 2017 or even 2016 models are listed as used cars with 4 or 21 or 4000 miles – I assume most are unsold new models with some demonstrator mileage. If you can live with a hatchback or sedan there are some very serious discounts available. My friend ended up with a 2018 BMW 330GTxi executive car (never titled to anyone besides BMW) with just over 10K miles for 40% off sticker, and a .9% 60 month loan.

  • avatar
    Jagboi

    Seems to me that this is an excellent reason to have a “build to order” model of sales. The customer gets exactly what they want, and the dealer isn’t sitting on stock for years. Of course, customers will have to forgo their instant gratification urges.

  • avatar
    DenverMike

    It’s gotta be blowback against new car prices, bundling, no manuals, corporate/dealer/service greed, built-in obsolescence, etc.

    And what does $20K get ya?

    Yet every year there’s more better, used-car choices. We’re no longer having to deal with tired/leaky engines in falling apart cars, failing emissions, at just 120K miles, unless we want to (European cars). A factory 400+ HP Mustang with 120K is just broken-in, good for another 120.

    For the price of a new, cheesy “base” Wrangler, you can dump major money into a used one, basically the same thing, or a “turn-key” that someone’s already tricked-out with the lift-kit, winch, big wheels/tires, re-geared, air lockers f/r, etc, and still pocket a bunch of cash.

    Just $10K or less scores you a near-mint ’90s-ish speciality Japanese sports coupe, 5.0 Mustang, Bronco, you name it, use your imagination (justbringatrailer) and win big.

    Or a Brand New Nissan Versed!

  • avatar
    Jerome10

    I suspect we are definitely in, or just past the “top”.

    If I recall this was the same thing going on in 2007-2008. New cars just sitting and sitting and sitting, and even giant incentives were not doing the trick.

    But I have to think, if you want a sedan, now is the time. Combine those market forces with automakers that are not cutting sedan production quickly enough to keep up (down?) with demand and steals have to be out there.

    I mean when I look at Mazda6 sports for under 20k, or if that Buick referenced above for $18.8 (if brand new)…. that is a TON of car for the money. They will last a long time, are nice places to spend time, cheap to buy, keep it for 10+ years and 200-300k miles.

  • avatar
    tankinbeans

    Thanks for the earworm!

    Moo!!!

  • avatar
    jalop1991

    The 2018 GTIs didn’t get released by VW until late January 2018. The R was even later.

    So here’s a thought: Tesla doesn’t have model year cars, do they?

    Neither do computer companies have model year computers. And of course the Tesla is a rolling computer, updated dynamically…

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