Manufacturers of automobiles usually handle with a lot of care to strike a balance between supply and demand. No matter if it is BMW or Honda, this one applies to all of them. In some cases, the demand usually surpasses the supply. The reverse is true in other cases-a build up of inventories might be witnessed. More than often, such a scenario culminates to slashing of prices. A company might even explore other options going to an extent of offering finances at low interest rates.
It is common for unsold automobiles to remain with the dealers while awaiting a transaction. The dealers will carry forward inventories of the previous year into the following financial year. Besides, they will also have a current supply of the new model. Simply put, there, might be inventories for the new models spanning four years. Although the values of the vehicles might have dropped, they are still seen as new.
Both parties- manufacturers and dealers – are usually intent on getting rid of the unsold models. When a model lies on the dealer lots for long will certainly taint the image of the relevant brand. This calls for quick sales at the slightest opportunity available. With such a phenomenon, the manufacturers are tempted to persuade the buyers by increasing incentives. The dealers will equally receive secret incentives so as to have the unsold vehicles out of their lots. All those shopping for cars should always be on the look-out for such incentives to avoid being victims.
Some dealers in new cars might opt to get rid of them through public auctions. Here, the concerned dealer provides an inventory of the unsold models at an auction. During the auction, private parties or other dealers might show interest in buying the vehicles. After being auctioned, the state does not treat them as new. Other dealers donate the unsold vehicles to charities where they take substantial tax cuts.
This article was inspired by the BUYcarparts.co.uk website.