Some Car Dealers Are Pricing TOO LOW

  • 2 min read

The shift in the used car market, especially from the end of 2022 to the beginning of 2023, presents a surplus of inventory and plummeting book values. However, this shift creates opportunities for both dealerships and consumers, according to insights from Auto Marketing Variable Management.

Understanding Distressed Inventory
Distressed inventory in dealerships refers to vehicles that linger on lots for prolonged periods, typically 30 to 45 days or more. This aging can occur due to various reasons, such as diminished market demand, unpopular colors, or undesirable equipment packages. These vehicles, termed “left-handed,” struggle to attract buyers, prompting dealerships to consider discounts to clear them.

Pricing Challenges for Dealerships
Dealerships often face the challenge of mispricing their inventory. While distressed vehicles might be overpriced, profitable and desirable cars might be priced too low. This occurs as dealerships react to distressed inventory, overlooking the value of certain vehicles that could command higher prices due to their desirability.

Consumer Advantage in Pricing Discrepancies
Consumers can capitalize on these pricing discrepancies. By broadening their search parameters, such as considering different models or widening their geographical scope, they might stumble upon vehicles mistakenly priced below their actual worth. This requires patience and a keen eye on market trends.

Leveraging Dealership Mistakes
For consumers, a dealership’s oversight in pricing just one vehicle could present a golden opportunity. Patience becomes key—avoid rushing into a purchase based solely on preference. Instead, focus on finding the right combination of price, features, and quality, even if it means widening the search radius.

Strategic Approach for Consumers and Dealers
Both consumers and dealerships benefit from vigilantly monitoring market trends. While consumers seek undervalued vehicles, dealerships must balance inventory pricing to prevent both distressed inventory and undervaluing profitable cars.

Finding Deals in a Dynamic Market
In a dynamically shifting used car market, opportunities abound for savvy consumers and vigilant dealerships. By understanding the market, being patient, and widening search parameters, consumers can unearth excellent deals that might otherwise go unnoticed in the evolving landscape of the automotive industry.

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