Going to visit a dealer on a rainy day or the third Sunday after a holiday might not help you get a better deal on a used car, but tracking how long it’s been sitting on the lot may work in your favor. Aged inventory takes up valuable lot space while interest adds up every day motivating most dealers to drop the price to sell it quickly.
Most cars arrive on a dealer lot arrive from wholesale auctions or customer trade-in and are paid out from dealer funds or by a loan through floorplan financing. As with most loans, interest and fees are paid until the loan is satisfied for the floorplan. Each day of interest cuts into the potential profit for a vehicle so dealers try to move inventory as quickly as possible.
Friends often tell me that they have seen the car they want sitting on a lot for a month or so and ask why it isn’t deeply discounted already since it’s been there for a long time in their eyes. Dealers have a slightly different definition of a long time on the lot and month old inventory is right in its sweet spot to sell. Generally speaking, dealers consider a unit as old inventory once it passes the 3 month mark.
The first round of pricing on a vehicle is usually set on the expensive end with the hope someone will come in who hasn’t researched the pricing or really wants that specific model — but as it’s set hopefully high, it only lasts for a couple of weeks. The price gets reduced closer to the market average around weeks 3 and 4 and stays in that range until it hits the 60 day mark. Some dealers reduce the price once more at this point. However, the biggest reductions usually occur once the car has been on the lot for 90 days.
Generally the vehicle gets reduced very close to cost once it hits the 90 day mark in the hope that it will sell without having to go to wholesale auction. Some dealers will send cars to auction on the first available date once they pass the 90 day threshold, but others may wait 120 or 150 days and try their chances to break even. This is the best period to buy the car as most dealers will be willing to sell it between the auction value and their cost so they can at least save on the auction fees. The risky part is that most vehicles will sell well before hitting this range and you may miss out on the vehicle you are looking for.
Certified Pre-Owned vehicles are a special case as they require a specific measure of reconditioning to be performed along with a certification fee of $500 to $2,500 to be paid to the manufacturer. In some cases, if these vehicles are slow sellers, the dealer may roll back the certification if the manufacturer allows it and sell it as a standard used car. Once the CPO certification is removed, the vehicle loses the attached warranty and the dealer is not required to pay the certification fee. There are exceptions to these guidelines as I have seen dealers stubbornly hold on to a vehicle at a set price because they have too much time or money invested into it and don’t want to feel the loss.
Knowing the general schedule is helpful but most people are not willing to drive by a dealership every week to record how long a car has been on the lot. In this case, using online tools is very helpful. An easy first check is to look at the Carfax report if it’s available as it will usually show an entry stating “Vehicle offered for sale” which will match the first day that the vehicle is available on the lot. I also like to use CarGurus.com as they show a breakdown of how long a vehicle has been listed there and a history of the price drops and increases.
Tracking the car price and waiting is beneficial if you are not in a hurry to buy or the car is plentiful, but the best path to purchase is to research a fair price and offer that to the dealer. If they do not accept your offer you can always leave them your contact information and tell them to contact you if the car does not sell and they drop the price.
[Screenshot: CarGurus.com]
I’m looking at buying a cheap car from a used car lot, listed for $4,000 pictures of it with snow on the ground. I would assume a trade in, but strange that it has sat for half a year. A car I traded in a while ago sat for over a year before being sold, it too was in the $3,000 range. Are cheap tradeins on the b lot a different story since interest ins’t really a factor?
“Snow on the ground” photos are a great shopping aid in the spring and summer.
But if the car you want isn’t selling, maybe there’s something wrong with it that you can’t see without a closer inspection.
I used this tactic when buying the wife’s Volvo C30. First advantage it’s a rare, odd ball car so your choices are limited. Volvo only sold about 300 a month in the US. So those that are for sale sit around a long time looking for a new home. Now with the power of the internet I was able to find 3 in our local area that meet our criteria . Over time I could watch as dealers (and even private sellers) slowly lower their price trying to get a bite. Then suddenly a car would disappear from my cyberspace radar. This clued me in on what price a C30 actually sold for.
When we found a car we wanted I walked into the dealer with all this knowledge and told him he was free to verify my data. This confirmed that he could sell the car now at a “sellable” price or wait months to maybe sell for about the same. As a result the negotiations turned very quickly in my favor. Clearly this doesn’t work for your average Camry or F-150 however since they are dime a dozen and on every street corner. However those of us that desire a manual transmission can gain a quick advantage as such vehicles in the minority and thus sit in inventory longer. This is an immediate advantage for the buyer who is willing to play the waiting game.
I am stunned that I’ve never seen a for sale sign on a truck in the woods out here in the country.
There is an old (early to mid 50s) IH dump truck for sale in a nearby field, complete with hand painted plywood sign…
Lot time affects new car prices, too.
I’ve seen amazing deals on stale – but new – cars, and got one once myself. Unfortunately, its brakes were so rusty from sitting that it needed all new rotors in its first week of ownership.
Well the current ads for GM and Chrysler products in my area are huge rebates specifically on “vehicles in stock the longest”. For GM trucks it is 20% off of MSRP. GM has been advertising deals like that they are subsidizing, on and off for going on a year now. The Chrysler ads have popped up in just the last month or so.
You’re right about affecting new car prices. Oklahoma used to have a state safety inspection for vehicles. When the new cars came in the dealers would affix the safety stickers and thus you could track how long the cars had been on the lot. I especially remember when the Miata first came out and the greedy dealers where charging $$$$ above the MSRP. The Miata’s sat and sat and sat…
Yup, the safety inspection sticker method has worked well for me over the years. NC stopped requiring the stickers several years ago but you can usually find the dated safety inspection report in the glovebox. Even on used cars it’s worth rummaging in the glovebox, I’ve found used car inspection reports from the dealer shop that tell me when it arrived on their lot.
I bought both my new cars at good discount. They were sitting on the lot for 5-6 month. I know that from windows sticker which contains all info about car including when it was manufactured.I checked stickers of the cars I was interested in before going to dealer on their website so I already knew which car sat there for how long.
Carfax is useful for new cars too. Most dealers won’t offer it or post it online, because most people are only looking for accident reports.
But if you can get your hands on it, it will show when the car arrived at the dealer’s lot and was put up for sale. You might not know by the look of the car that it’s been sitting there for 6 months.
When they have to jump the battery to let you test drive it, that’s a clue too :) One salesman with a sense of humor wryly told me the car came with two of them to help me push start it (it was an older Mercedes sedan)
My ’13 Malibu (which probably sat on the lot for months) was equipped with “Duralife” rotors, which I must admit, were pretty corrosion-free upon purchase, and produced only a minor amount of brake dust in the first 1000 miles.
I assume that it helped reduce warranty claims, as many of their cars sit for long periods –
“Wear Item” or not, rotors that warp in the first few thousand miles would bring outraged owners back to dealers in droves, which probably encouraged GM to find a cheap solution.
On the rare occasion I buy off a Lot , it’s always some dusty old thing with flat tires that they’re reasonably glad someone finally asked about…
Once in a while I’ll get the old ” that’s a RARE ONE !! ” B.S. and have to walk .
-Nate
“You know what’s even more rare than this car? A willing buyer.”
You can always just ask the salesperson what cars have a spiff on them. The salesman will generally get a bonus or incentive to sell that vehicle whether the dealer makes a profit or not, and he/she may be very motivated to sell the vehicle at a big discount just to get the spiff.
I got wholesale price on a Tundra from a Ford dealership that way; I asked the salesman what used vehicles had a spiff on them and he got very motivated very quickly. They had the truck for over 90 days and just wanted it out of there. For the right price I was happy to make it happen.
If you help people get what they want they will often bend over backwards to help you get you what you want.
Another approach that tandems well with this is the off brand at large new car store. As an example I picked up my wrangler from a VW Audi store. Nothing wrong with it, other than a bad case of lot rot.
H sales guy and ales manager both advised that it had been sitting around for months. Upon asking they advised that they couldn’t seem to convince a used vw buyer to look at a Jeep Wrangler. Strange.
Either way, they gladly gave me too much for my trade and sold me the wrangler below market for opportunity to have something else on the front row that perhaps might appeal to their customer base.
i once bought a new car at what i considered a good deal by driving it, memorizing the mileage and coming back a week or two later and seeing that it had only been moved 0.1 miles. that fact took the air out of the salesman’s story about a hot car with all sorts of interest.
i did like bumpy ii’s retort, “you know what’s even more rare than this car? a willing buyer.” classic.
I’ve done that trick and I remember one time I came back a week later and the mileage on a program car was 2000 miles LESS. I never came back to that dealer, and I couldn’t get the state attorney general’s consumer protection office to show the slightest interest in that obvious odo rollback. It was a big name franchise dealer too.
I tried this with an old 86 Camry, the dealers had it for months, it was returned after a buyer had the fuel pump die and couldnt wait weeks for the repair.
The car lists for $2500, I talked them down to 220p (they wanted to add a $486 money order), I walked off and thought it over, the car would need a little work.
I call up a week later ready to buy, suddenly the car has a massive coolant leak according to the salesman, they havent returned my calls on the repairs.
Dealers can access several software platforms that permit them to market price a used vehicle from the initial retail offer. while not keeping used vehicles longer than 60 days in inventory.
The concept of waiting for a dealer to get stuck with a used vehicle for over 90 days to get a deal, is “old school” in 2015. Especially that all dealers are very aggressive in managing their used vehicle inventory, and the financial risk posed by older inventory.
There are always the occasional exception that a vehicle might have fallen through the cracks and becomes aged. Usually a dealer will take a low price even at cost, while ensuring that the business office will generate a profit to counter the low to no profit on the sale.
The other side is is when a dealer has a unique vehicle that is market priced, he will often adamantly stick to his price.
With used vehicles market priced to sell quickly the discount margins from the price are slim to none. At market (discounted) prices, a dealer will not discount again in the showroom…known as double discounting.
“but the best path to purchase is to research a fair price and offer that to the dealer”
Can you write an article on how best to do this?
Cars.com and Autotrader have the most complete access to all the cars out there on lots, and neither of them track lot time. Trying to find a specific car on Cargurus is painful at best.
Just keep checking every week… you’ll see the same cars coming up over and over again. Then grab a few screenshots (or old school printouts) of the ones your interested in and check back later. You’ll notice slight tweaks to the ads, sometimes the photos get updated, or minor copy edits (Newly Listed, HOT, SALE… standard sales BS), but 9 times out of 10 the price just drops. For example I watched a particular 350Z drop exactly $200 every week for about a 2 months before it sold. It was almost like the dealership had a piece of software that automatically “refreshed” the listing. Another easy way to check: download the photos because almost all digital images contain EXIF data which will tell when and even where the image was taken.
I believe Autotrader has a “save my search” option and even a choice to “email me if this changes” function. Basically the site will push alerts to you about cars you are interested in. These aren’t emails (spam) from the dealerships, they are updates to changes on the site or search results themselves. Honestly its almost too easy given the power of the ‘net to provide so much data with just a few clicks.
As I mentioned above, if you can get a look at the Carfax, it will show when the dealer initially acquired the vehicle and put it up for sale.
That’s what I did when I bought a used car. The dealer had the vehicle we purchased for almost four months, and the purchase price was about $10K lower than it was originally listed at.
Many dealers give you access to the CarFax online.
There’s a little tiny lot on one of our back roads near our house. This guy has 7-8 cars at all times…
Before I green-lit the repairs on the Trooper a year ago I looked over his inventory, just to see what I could get for similar money to the $4k repair. He had a pretty light brown 2004 Sable fully loaded with 60k miles and the 3.0. I was very tempted. It’s still there, as is the 2000 Lincoln LS.
Poor guy.
The old Chrysler dealership near downtown Ithaca NY is the same way. Guy lost his franchise in ’08, but the dealership remained as a service and used car showroom. The owner is super old and I think kind of losing it mentally. He’s had the same cars on the lot for quite literally 3 years. Incredibly overpriced, and I guess he never budges on price. My family’s only interaction with the dealer was back in 1997 when we were minivan shopping. The ’95 Voyager we test drove for $8k struck us as a much sloppier put together and worse driving vehicle than the ’89 Mazda MPV we bought from some neighbors down the street for $5k with 60k miles. Man the used car market used to be A LOT better.
The ’09 Taurus I bought in the spring of ’11 had been sitting on the lot for almost five months before I bought it, as per the Carfax I pulled on it before I went to look at it. Surprisingly, it was a Ford dealer. You’d think they’d have been able to move the thing, but there it sat. Finally some enterprising salesman at the dealership ran a desperation Craigslist ad for the car and that was how I found it; I had just totaled my ’07 Five Hundred and was looking for something to replace it PDQ. Let’s just say that I got that Taurus at a VERY good price, hassle-free. We were in and out in an hour.
Turned out to be super reliable too. Best $11K I ever spent on a car.
Most impressive.
People following 28CL car buying tips know what’s up. V6 FWD D-platform vehicles are good used cars.
Glad I’m occasionally useful.
Who else can give us wholesale prices on random cars? ;)
We need a “28-Cars-Later” buying tips list. It’s easy to forget some of the better options out there….
I am available for a fee :) I doubt any of the dealers here would be so forthcoming since its their livelihood and all (its not mine of course). Personally I’m bearish on the future of used cars, the technology is going to make them very difficult to “buy and hold” so to speak out of warranty.
I didn’t mean that advice! I meant the “I have $5000 to buy a sort-of nice sedan. What should I get?” advice.
Though, it is useful to know that old Audis are worthless to the dealer ;)
For better or worse, for dealers, I think negotiating is winding down. With sites like Car Gurus and cars.com, you basically have one shot to a lot of buyers. If someone else is cheaper, they’ve got the customer.
———
There’s a part of me that says to buy an old car (I have a soft spot for big Buick wagons) and keep it forever. I work on computers all day- I can see how they fail. I’m torn on that issue…
I get deep into online listings from just about every source. I also have access to wholesale prices. Fairly frequently vehicles I have been tracking on a retail site will pop up on the dealer to dealer channels – usually after sitting a while and a few price drops. If the asking price or starting bid on the wholesale sites are any indication – the dealer still has room between what they are willing to take wholesale versus retail.
Two quick examples – on the fully depreciated German roadster I am looking to grab – Dealer has had the car since the spring. I’ve driven it and passed on it. Listed for $11k, I saw the auction listing where they purchased (in April) for $7100 . So even if the dealer took $8500, there is some profit there after incidental costs. They still have the car today.
The other example is another listed since spring. Price drop several times to $8995 – actually looks like a good deal (clean car). The car is listed wholesale for $7200 buy it now.
I have yet to find the right car to use the knowledge – but it doesn’t seem to me that dealers ever drop prices all the way to the wholesale value. Not saying there aren’t deals, but dealers aren’t giving stuff away.
” V6 FWD D-platform vehicles are good used cars.”
I don’t know what a ‘ d Platform ‘ is , I got a screaming deal on a low mileage 1991 V6 Camry , never smoked in and ice cold AC , it blew the head gasket the first hot day I took it on the freeway full of people….
Oops .
My buddy who works for Toyota and is now laughing as he reads this told me after I bothered to ASK , that all V6 Toylettas are suspect after 60,000 miles or so , I’d foolishly bought a grenade with the pin already pulled .
-Nate
The D3 platform is what underpinned the Taurus and Five Hundred (Among other models)
I’ve been using iSeeCars.com to track listing age. So far this is the best research tool for finding every car on the internet.