Push vs. pull: How dealer inventories affect us all
Categories: News
Written By: admin
Over the past week I’ve needed to order several vehicles for clients. That’s a bit unusual; during the past two decades, I’ve normally been able to get what someone wants either through one of the dealer fleet departments I work with on a regular basis, or by having them do a ‘dealer trade’ to get it—especially on American vehicles. But no more; I couldn’t find the right Chevy Traverse for one couple, nor a GMC Denali for another. I also ordered an Audi A4 and a Range Rover Sport.
This reflects a change in the mentality of manufacturers, as they move from a ‘push’ strategy of shoving millions of unwanted cars, trucks, and SUVs down dealers’ throats (in order to keep factories running to cover fixed costs and meet union contract demands), and one reliant on people actually buying their vehicles.
This began to be apparent last summer and fall, after the Cash for Clunkers program cleared out dealer inventories, and savvy new leadership at GM and Ford took advantage of the situation, keeping production as low as possible going forward. Chrysler’s B/K turmoil delayed them a bit, but by year’s end, everyone was aboard on the ‘pull’ model.
The Detroit 3 dealers entered January with the fewest vehicles in stock since at least 1992, when industry bible Automotive News began compiling data. With a supply of only 52 days, even GM—the bad boy of push—was comfortably below the 60-day threshold considered optimal in days of yore. Contrast that with mid-decade, when they stuffed so many unwanted cars onto lots that inventory ran at 90-120 days supply, and the only way to clear it was with massive rebates and incentives.
This can be frustrating; people like to get what they want, when they want it. Rebates and incentives are way down (GM alone dropped them an average of $2500 per vehicle in December, compared to a year prior). And it can complicate financing and trading in as well.
The upside is used car resale values: studies show that for every $1000 in rebate a manufacturer throws at a new car, late model used examples of that same vehicle loose from $900-1100. So as the car companies wean themselves off rebates, owners of used cars, trucks, and SUVs benefit. Don’t forget: in America, three times as many used cars are sold every year as new.
Firmer resale values help everyone: they make leasing more affordable, lower uncertainty of owners (and the manufacturers), and actually decrease cost of ownership for most consumers. That may seem small potatoes right now, but bodes well for our collective future as both buyers and sellers.











March 29th, 2010 at 3:38 pm
[...] prices as reported by Edmonds, auction numbers, things continue to heat up. That’s due to shortages of desirable new cars, trucks, and crossovers, and the easing of credit restrictions from [...]
September 8th, 2010 at 9:55 pm
Buy:Cialis.Viagra Super Force.Propecia.Cialis Super Active+.Viagra Super Active+.Viagra Soft Tabs.VPXL.Tramadol.Levitra.Maxaman.Viagra.Viagra Professional.Super Active ED Pack.Cialis Soft Tabs.Soma.Zithromax.Cialis Professional….