We have seen sales rates decline hastily. What does that mean and why should we care?
Among all the vehicles that have been offered for sale to wholesale auctions this past week, only 46% of them actually sold. The dealers that had the other 54% of the cars for sale near me are still costing that dealer money to have it sit unsold.
How It Works
Imagine you bought the vehicle either through trade or at a sale auction for 40 thousand USD. And you had reconditioning fees which really do not cost the dealer as well as inspecting repair works that needed to be done to make it sale ready. Let’s say you spent that 1500 USD, and now you are up to 41,500 USD. Now you have to advertise it which means more expenses, let’s say 200 USD a month. So it is already 41,700 USD.
When you buy a used car, it’s possible to utilize a bank’s money through a program known as Floor plan interest. This involves paying a monthly fee, which could be around 300 USD, bringing the total cost thus far to 42 thousand USD.
What is more, every next month you add another 300 USD of floor plan interest plus 200 USD for advertising. You have 90 days turn policy at your dealership, and if after these 90 days you did not get rid of the car, you take it to the auction at 45 thousand USD at this point with all your expenses. They offer you only a 38 thousand USD deal and you refuse to sell it. Curtains closed.
According to Black Book, we will see a 21% of the total decline in used cars wholesale prices. It is around 5-9 points above pre-pandemic norms. Therefore, the dealer that doesn’t sell is just continuing to add costs to the vehicle that is waiting to be sold, while its value keeps declining. Plus another thousand dollars for extra fees:
1. Auction fees.
2. Transportation fees.
3. Detailing (to make the care clean so that it looks good).
The dealer isn’t making any money while sitting on the vehicle, but he/she needs to return the investments made. There are dealers out there that are sitting on an inventory that is 20% less than what they bought it for.
What To Do?
All in all, you should always remember this: cars for sale near me prices are very NEGOTIABLE, and now is a fine time to get a new car.
Find your perfect deal on Rolls Auto Sales!
