Why Are There Thousands of Unsold Cars Piling Up?
68- Ford Cash for Clunkers
The Ford Cash for Clunkers website, Let Ford Recycle Your Ride, was launched by Ford Motor Company 24 hours after President Obama signed the government sponsored CARS program into law. The Cash for Clunkers program allows consumers to receive rebates - Check out the 2010 Chevy Camaro
Automakers: Too Proud to Slash Prices
I just had to give my two cents about the car industry after seeing several photos of brand new cars that are going unsold and piling up around the world. People these days just don’t have the money to buy new cars, and the automakers are finding it hard to store them all.
Nissan is storing thousands of cars around their factory’s test track; Toyota, Mercedes-Benz and Nissan are leasing space on industrial-sized parking lots at the Port of Long Beach for thousands of unwanted cars; for the past two years GM, Chrysler and Ford have been storing unsold cars at the Michigan state fair grounds and airports; and tens of thousands of brand new unsold cars are sitting on the docks at the Port of Baltimore ready to be shipped, but with nowhere to go.
Psst... Lower Car Prices, and They Will Come
I think this is crazy! If the automakers would just drastically lower their car prices, these cars would definitely sell. I actually want to buy a brand new four-door Jeep Wrangler, but am just not willing to shell out $30,000 right now. However, if the price were to drop to say $20,000, I’d be at my nearest Jeep dealer in a heartbeat. But sadly, automakers don’t want to lower the prices of their automobiles because they’re afraid of hurting their image. So they would rather spend God knows how much money storing these unsold cars, rather than slash the prices and at least make some money off of them. I think the government should have made them sell off their inventory before giving them billions of tax dollars. Every other industry in the world cuts prices if they have a product that is not selling well, why should the auto industry be any different?
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shovel 2 years ago
So let's say you are a manufacturer of cars and you have 5 factories and 5000 employees you have already spent the money to educate/train and you have a system that works. To maintain this system you have to move 40,000 units per quarter which happens to be how many you've been successful at moving for the past few years. Then suddenly for 3 quarters in a row you're moving half that. You have 20,000 units sitting in port, 20,000 on the water and parts for 20,000 more in your factory or on order from your supplier (who only gives you a good price because of your CURRENT volume)
So your option is to slash prices drastically to move completed goods right?
Wrong. Now you've not only undermined your brand value but also you've just undersold your future self by saturating the buying public with new cars. Even if next quarter the economy's running full steam again, you just shoved three quarters of a year worth of brand new cars in the public's hands with prices they can't refuse. Are they going to start buying your regular (higher) priced cars again? Not till the brand new cars they JUST bought start falling apart! And why would I buy a 2011 Jeep Wrangler for $30,000 when my buddy just bought a 2010 one for $19,999? I'd feel like a chump!
The car makers are stuck swallowing the storage costs because it's really their only option. If they buckle now, they may as well burn down half their factories too 'cause they won't need those either.