Visualizing The Train Wreck Of Auto Inventories

Read more on this subject: Business/ Commerce
News Story Source: by Daniel Ruiz
Today, 2016 new car inventory stands at 112,310.

At the current rate of sale, we will not sell through the new 2016 inventory till the last week of August.

Why this matters

Dealers always focus on selling their oldest vehicles first. This is because the majority of dealers floor plan their inventory.

As a vehicle gets older, the interest expense grows larger. Because of this, the oldest inventory always gets the prime real estate at a retail dealer location for maximum visibility. Newer arrivals are usually staged in lower customer traffic areas and not discounted as much in efforts to sell the oldest vehicles first. This method of inventory control works great as long as supply doesn't overwhelm demand.

More Supply Than Demand Is Our Current Reality

Here's a visual representation of this in action. On the way to a local park, I passed a dirt lot previously used as farm land now filled with cars.  I looked at my wife and asked, "Did we just see
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