3 ms·

I've never bought a car, but why do dealers keep inventory at all? Seems like it's the cause of all their headaches. Just have one of each model for test driv

by karzeem 16y ago

I've never bought a car, but why do dealers keep inventory at all? Seems like it's the cause of all their headaches. Just have one of each model for test drives, then let people custom-order. I know people like to be able to drive off the lot with a new car, but we're talking about the biggest non-home purchase of their life. They're not willing to wait a few weeks to optimize it? Especially if the inventoryless dealer's lower costs mean they get a much better deal?

brc 16y ago
There are many people who need to buy a car there - now, that day or the next. Maybe their old one just died, maybe they are about to go away for work, whatever. Some people just want things right away. Spend some time around a car dealership and you'll find buyer behaviour that seems very unrational to a careful person, but then the spread of car buyer is pretty much the spread of the population. As such, dealers need a certain amount of inventory to keep the showroom full and satisfy buyer demands. Finally, you'd be surprised how many people can be upsold on expensive features (sunroof, leather, alloy wheels) with high margins because the car they are intending to buy is sitting right there, on the floor, ready to go, with just a teensy-weensy few more features on it. You wouldn't get upsold at McDonalds if you had to wait for the bigger fries, the same at dealers. Having the up-sell sitting right there, in front of the buyer, sometimes works with getting them to buy more. The flip side of this is that certain franchised dealers are forced to carry inventory by the manufacturer. The manufacturer helps out with the inventory costs by giving better finance on the inventory, but as a flip side they basically force-feed the dealer with stock. It's up to the dealer to move that stock. I guess from the manufacturers point of view, it gives them a certain level of predictability with their month-to-month sales and keeps the dealers working hard to move cars.

by karzeem 16y ago

brc 16y ago

There are many people who need to buy a car there - now, that day or the next. Maybe their old one just died, maybe they are about to go away for work, whatever. Some people just want things right away. Spend some time around a car dealership and you'll find buyer behaviour that seems very unrational to a careful person, but then the spread of car buyer is pretty much the spread of the population. As such, dealers need a certain amount of inventory to keep the showroom full and satisfy buyer demands. Finally, you'd be surprised how many people can be upsold on expensive features (sunroof, leather, alloy wheels) with high margins because the car they are intending to buy is sitting right there, on the floor, ready to go, with just a teensy-weensy few more features on it. You wouldn't get upsold at McDonalds if you had to wait for the bigger fries, the same at dealers. Having the up-sell sitting right there, in front of the buyer, sometimes works with getting them to buy more. The flip side of this is that certain franchised dealers are forced to carry inventory by the manufacturer. The manufacturer helps out with the inventory costs by giving better finance on the inventory, but as a flip side they basically force-feed the dealer with stock. It's up to the dealer to move that stock. I guess from the manufacturers point of view, it gives them a certain level of predictability with their month-to-month sales and keeps the dealers working hard to move cars.