Why Some Car Dealers Are Pricing TOO LOW: The Hidden Risks

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Overview: The used car market saw dramatic changes at the end of 2022 and into 2023, with more inventory and fluctuating book values. This shift presents both challenges and opportunities for dealerships and consumers.
Key Points:
  • Distressed Inventory:
    • Vehicles that have been on the lot for too long (30-45+ days) often become distressed inventory.
    • Causes for distress include lack of demand, poor color choices, or undesirable equipment packages.
    • These cars may be overpriced, requiring dealerships to discount them to sell.
  • Undervalued Vehicles:
    • Dealerships sometimes price desirable cars too low due to poor inventory management, often reacting to distressed inventory.
    • Popular vehicles priced incorrectly sell quickly, which can benefit savvy consumers.
  • Consumer Strategy:
    • Widen Your Search:
      • Look beyond your desired model to find undervalued options (e.g., considering similar models or trims like an XL vs. XLT).
      • Broaden your geographic search range—vehicles may be priced lower in different locations.
    • Watch the Market:
      • Keep an eye on inventory pricing trends over time; dealerships may make pricing mistakes that benefit consumers.
      • Be patient and avoid rushing into a purchase—wait for the right vehicle with the best price and features.
  • Opportunities in the Market:
    • Dealerships sometimes price cars too low by mistake—consumers can take advantage of these deals.
    • Patience Is Key: Finding the right car at the right price takes time and careful research.
Actionable Advice:
  • Don't settle for the first car you find. Be patient, watch the market, and stay flexible in your search.
  • Check dealership inventories frequently for price changes and take advantage of any pricing errors.
Conclusion:
  • Consumers can find great deals if they know what to look for and act quickly when a dealership makes a pricing mistake. Dealers should also be mindful of pricing strategies to avoid undervaluing their inventory.
Why Some Car Dealers Are Pricing TOO LOW: The Hidden Risks
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