January 09, 2006

Hello Tony

What happens to new cars that do not get sold as the new model year cars hit the car dealerships? I understand that they are still technically new cars, but if the car dealers hold on to these non-movers they are having to pay certain fees every month to keep them on their lots.

I realize that the car dealers also make every attempt to sell these cars, but there must be some that are not sold each year. Do car rental companies purchase these vehicles? Is there a clearing house where individuals could buy these vehicles?

Thanks,

Jed J.

Answer:

Hi Jed,

Car dealers will pull out all the stops to sell these left over cars. Every dealer has to deal with this problem each year. Car rental companies do not purchase these vehicles nor is there any "clearing house" to dispose of them.

The car dealer will simply keep the car until it is sold. Sometimes a car will sit a long time, but they always eventually sell. Always!

There's a saying in the car business that goes like this: "There's an ass for every seat!" It's crude I know, but it's also very true!

Also, while these cars can usually be bought at a discounted price you're starting out with a year old car, so the depreciation is a killer. Down the road when you go to trade it or sell it it's a year older than if you had bought a current year vehicle, and as a result it's worth a lot less. So even though you get a discount when you buy it you loose any advantage you may have gained when it comes time to get rid of the car.

All my very best...

Tony Iorio