Ok.. so where do they go?

Here's a discussion I started with the significant other this evening: You know how all those cars are built every year. Hundreds of thousands of new cars that sit on showroom floors and parking lots. Now we know that not all are sold. Even if it was as high as 50% being sold, what the heck happens to the remaining cars???

I mean think about it. There are about .. what? 5-7 major car manufacturers in North America/Japan alone. The big ones -- Ford and GM -- produce hundreds of thousands of cars each year, and with every new model, they last longer and longer. So, the cars that aren't sold. Where do they go?

they go to cheaper bulk car dealers etc....

Maybe if you're lucky...

They get sold to joe public, years later as new. YOU NEVER BYE A NEW CAR.

How do you know they don't get sold? If that is the case they probably just move them around. There isn't really a great stockpile, cars are ordered. I mean they won't churn out 100k Cougars if the dealers aren't demanding them, I don't think.

I imagine some get shifted to the large auto auctions and moved around if the dealer doesn't move it fast enough. What I want to know is how they move all the cars traded in all the time? Good question though, at least around here they seem to move and sell very well.

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Originally posted here by RoadClosed
I imagine some get shifted to the large auto auctions and moved around if the dealer doesn't move it fast enough. What I want to know is how they move all the cars traded in all the time? Good question though, at least around here they seem to move and sell very well.

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This is where they go in California. They are always having auctions in mall parking lots or "significantly discounted" auto shows.

Yes but there is a finite number of purchasers of cars. Jaguar and higher-end manufacturers either build to a specific limit or based on numbers of orders. But if you look at the more "mass market" car, even if they build say... 30,000 Cougars in a year, not all are sold, especially with longevity. So where do the extra cars go to? Books, as another example, usually send overstock to "remainder stores" (places that sell books at half or a quarter of their price). The books are sold until they are all gone and no further copies are published. But books are a smaller and more managable item. Cars aren't.

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Books, as another example, usually send overstock to "remainder stores" (places that sell books at half or a quarter of their price).

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A car remainder store....now wouldn't that be great.
I would imagine that some of them (at least) are offered to car rental agencies and fleet customers also. But that still wouldn't account for the numbers quoted.

To put this in perspective, I did a quick google search:

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Source: Google Answers

According to historian Rudi Volti, over one billion cars were produced worldwide in the twentieth century.

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According to David Eisenhaure, SatCon's President and Chief Executive Officer, some 60 million cars are produced each year worldwide.

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That's a lot of cars. I know families have 2 or more cars but many of the cars bought for kids or spouses are often older (car prices are high). Hrmm...

If you know that the big three have over $80 billion worth of unsold cars, I'd say this is a very valid question... heh.

I don't have a clue where they go, but there are some explanations for why they keep producing that many cars if they don't get sold...

All car-manufacturers have a huge fixed cost, and they all prefer lowering prices over lowering volume. If you come out with a new model, the start-up costs (for the production line, mainly) are so high that reducing production isn't an option.

Say Ford invests $1B in a new production line. By buying huge stocks of parts, they can reduce the prices on parts so that it'll actually cost Ford only around $5k to build their new model. If they sell the new car for $20k, making a profit of $15k per car and wanting to get the money they spend on the production line back, they'd have to build and sell 66,666 cars.
If they don't build those 66,666 cars, there's no way they can get their money back. Furthermore, if they'd stop production of the car, they'd still have to pay all of their personnel.
Having to pay people for doing nothing isn't exactly a good business attitude...

So you have a production line that only pays for itself when this huge amount of cars gets build on it and sold (if you don't build them, you can't sell them), you have factory workers and other personnel that need to be paid no matter if they actually build cars or not, and you have this huge stock of parts (ok... most car-manufacturers work with JIT, so they don't have the actual stock, but they probably have contracts with their suppliers)...

Only way to do it: by keeping on building more and more cars, no matter if they sell or not.

Car manufacturers produce cars at a pre-determind rate say 50 cars a day for instance. Those cars are stock piled, over here they are left outside. Unless there is a breakdown in production they will just keep turning out cars at that rate. If demand for that model of car is slow the stock pile will just grow and grow. Untill the company goes bust or they stop production.

This is what happens when car makers get it all wrong, hence the death of companies like British Layland. Well just about all UK car manufacturers for that matter

As with all manufacturing industries, the quicker you can make something and get it off production the less it costs to make the more profit you make. The problem occures when you cant then sell your product.

I still don't think a company can operate at a serious overstock. It would devalue everything? Good for us? I am just guessing but I am not convinced there is a great overstock of unbought cars of more than a few weeks or a few months supply for demand. Especially since automakers, like Ford suffered losses in 2000, 2001, 2002.

I did find some car forums that talk about brokers both online and off who deal in car trading for a living.

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I still don't think a company can operate at a serious overstock

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They cant, but it does happen when they get their marketing wrong of they produce a crap car no one wants.

I agree, there are going to be those cars that just don't sell. They just cut an entire division a week ago. Oldsmobile.

frist tehy sell them to corprate fleets at a discount
then to auto auctions
then they shamsh them down and make new cars with them