Dealer Strategist Advises On Stocking Sedan Models

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Thread: Dealer Strategist Advises On Stocking Sedan Models

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    Dealer Strategist Advises On Stocking Sedan Models

    Wards Auto
    October 2, 2019

    Sitting on too much of the wrong inventory is becoming increasingly costly. The National Automobile Dealers Assn. reports new-vehicle holding expenses are the fastest growing item on dealers’ financial statements – up 142% in 2019 vs. 2018. This is driven by the fact that new-car inventories are up compared with last year, while retail sales are beginning to slide.

    What’s unique about this year’s sell-down season is that there are an unusually high number of model year ’18 vehicles still collecting dust on dealers’ lots, while a lower percentage of ’20 vehicles have come through.

    “This is probably the biggest carry-over problem we’ve seen in the last several years,” said Mike Maroone, a former president of AutoNation Inc., who owns dealerships in Colorado and Florida. “It has been very painful.”

    What’s the best way to handle this situation if you’re a dealer representing a brand with an overabundance of current and prior model year vehicles?

    Be bullish on trucks and SUVs, skittish on sedans. Consumer demand continues to shift away from cars. I recently noticed a Hyundai dealer with a 555 days’ supply of 2019 Sonatas and 196 days’ supply of Elantras. Both metrics on those cars are well above the overall market average.

    This is trouble for two reasons: 1. Only three of every 10 new vehicle customers are looking for a sedan 2. Sedan customers are more likely to have a sedan as a trade, and your used-car manager would certainly prefer more CUVs.








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    Re: Dealer Strategist Advises On Stocking Sedan Models

    Be bullish on trucks and SUVs, skittish on sedans.
    No news here...but the countdown to the end of the sedan is gaining strength. If dealers are told to ease up on stocking sedans, it will only raise the consumer transfer to the more popular CUV/SUV/Truck units...

    GM's just released 3Q19 sales validate the thinking. It's amazing that the new XT6 outsold the ATS, CTS, CT6 and the XTS...COMBINED.

    Or how about this sales report from VW...

    Passat sedan sales, September 2018: 3,295
    Passat sedan sales, September 2019: 314
    Percentage Change: <90.47%>









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    Re: Dealer Strategist Advises On Stocking Sedan Models

    Quote Originally Posted by Perian View Post
    No news here...but the countdown to the end of the sedan is gaining strength. If dealers are told to ease up on stocking sedans, it will only raise the consumer transfer to the more popular CUV/SUV/Truck units...

    GM's just released 3Q19 sales validate the thinking. It's amazing that the new XT6 outsold the ATS, CTS, CT6 and the XTS...COMBINED.


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    It's not really amazing here in Florida. We live in a senior community and the vast majority of vehicles are small to medium SUV's. In the world outside our community, add trucks.
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    Re: Dealer Strategist Advises On Stocking Sedan Models

    If you want a sedan buy a 1 year old low mileage sedan - the resale hit on cars is just brutal.

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    Re: Dealer Strategist Advises On Stocking Sedan Models

    Quote Originally Posted by kool1 View Post
    If you want a sedan buy a 1 year old low mileage sedan - the resale hit on cars is just brutal.
    Low mileage, three year old luxury sedan works even better.
    Even loaded they're the price of a mid level trim mainstream midsize car.
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    Re: Dealer Strategist Advises On Stocking Sedan Models

    Quote Originally Posted by eaton53 View Post
    Low mileage, three year old luxury sedan works even better.
    Even loaded they're the price of a mid level trim mainstream midsize car.
    +1

    Almost makes me wish I needed a car. I suppose I could upgrade one of my 10+ year old cars, but I'm cheeeeap.
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    Re: Dealer Strategist Advises On Stocking Sedan Models

    I for one find this fascination by the public with CUVs appalling.

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    Re: Dealer Strategist Advises On Stocking Sedan Models

    Anyone remotely interested in the industry has seen this coming.

    What the sedan sales also dont tell you, are the level of incentives that are being used to move stock. Car makers are buying sales with lots of money on the hood. The market for sedans has absolutely collapsed. If I had sedans I would shift them to premium or performance. The only way that sedans may remain somewhat relevant is if more EV versions come online. As it stands there is no way I would sink a few billion on developing a next generation internal combustion mainstream sedan.
    Last edited by Downandout; 10-02-2019 at 08:31 PM.

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    Re: Dealer Strategist Advises On Stocking Sedan Models

    Quote Originally Posted by bmwboy2007 View Post
    I for one find this fascination by the public with CUVs appalling.
    That makes two of us, and that's about it.
    It sounded pretty good until I actually said it.

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    Re: Dealer Strategist Advises On Stocking Sedan Models

    Quote Originally Posted by kool1 View Post
    If you want a sedan buy a 1 year old low mileage sedan - the resale hit on cars is just brutal.
    Quote Originally Posted by eaton53 View Post
    Low mileage, three year old luxury sedan works even better.
    Even loaded they're the price of a mid level trim mainstream midsize car.
    I notice that a lot on my weekly Sunday look-about. One just has to be careful of making sure the odometer is in line and not a year old one with 28,000 miles on it already.

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    Re: Dealer Strategist Advises On Stocking Sedan Models

    GM overestimated the love for SUV's. Chevy dealer by me still has 320 Equinoxes in stock (2019) but only 1 cruze and 3 Impalas. The sedan is not dead yet. While the Cruze may have a great deal of competition from Civic, Corolla, Sentra and Kia/Hyundai models, I don't see much competition in the large sedan market. Impala and LaCrosse should be kept around.

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    Re: Dealer Strategist Advises On Stocking Sedan Models

    Quote Originally Posted by joey View Post
    Impala and LaCrosse should be kept around.
    There are plenty of pre-owned Impala and LaCrosse for anyone who wants one. Good bargains too - thanks to steep depreciation, these two models should be quite appealing to prospective customers who want a lot of "bang for the buck".
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    Re: Dealer Strategist Advises On Stocking Sedan Models

    GM doesn't have to worry about the sedans, they just gave the market to Honda, Toyota, Kia, Hyundai.
    My kids are both looking at the new Corolla hatchback. One of them was considering the Cruze, but after seeing the new Corolla, there is no going back.
    There are plenty of Civics, Corolla's and Sonatas around here.
    This CUV this is another phase, it will pass like all the other ones.

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    Re: Dealer Strategist Advises On Stocking Sedan Models

    IMO, sedans decline is due to them getting way too small for life, so of course it makes sense a somewhat bigger SUV on the same chassis will sell better.
    For me, the older school big sedan is my favorite. Currently drive a 300S V8 RWD and it is my favorite of all time. I just noticed the Charger had some amazing increase in sales numbers for late spring, early summer. Maybe because of the exit of many?
    What I don't understand is the local FCA dealer has all SUV's lined up to oblivion, and maybe 2-3 Chargers and 1 300 on the lot at any given time. So the average guy goes in to get a car, and probably leaves with a Grand Cherokee.

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    Re: Dealer Strategist Advises On Stocking Sedan Models

    Quote Originally Posted by canadian.bacon View Post
    ..................This CUV this is another phase, it will pass like all the other ones.
    Station wagons, mini-vans, CUVs? I think you will be proven correct.

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