Today we take a look at the vehicles with the highest and lowest days’ supply. In other words, which vehicles are sitting on dealer lots the longest, and which vehicles are flying off the shelf?
While you might not think this information is important, trust me it is. The vehicles that are sitting usually have the biggest rebates, but for sure they’ll have large dealer discounts. I talk about dealer’s floor plan on the Car Pro Show often. Floor plan is the credit line car dealers use to stock inventory, rather than have millions of dollars of operating capital tied up.
Dealers pay interest on the floor plan monthly, and currently with interest rates as high as they are, it can cost a dealer a ton of money. The current prime rate is 8.5%, and typically dealers pay one to one and a half percent over that, so some dealers are paying 10% interest. Do the math on a 50 million dollar floor plan line of credit, and you can see why those interest rates accruing on new cars can be a lot of money. This is why I say it is better for a dealer to sell a new car at no profit or even a loss if it has been in inventory a while.
Keep in mind, a 60-day supply of vehicles is considered to be perfect. Put another way, if no vehicles were coming in, the current inventory would be completely gone in two months.
Here are the vehicles with the highest and lowest days’ supply on the market: