T H E C A R M A V E N
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You may have heard about or seen this term in the process of studying up on which brand to buy for your next ride. It's an industry term, that, unless it's understood, can fly right over your head. But it can mean a big difference for the automotive shopper and buyer, and can have a direct impact on the ultimate price you will pay.
In short, a high days supply means ample availability, and a low days supply means a relative shortage. Emphasize the word relative. This measure is based on a month (or 30 days for arithmetic standard) time frame. For a shopper's reference, a 60 days supply translates into a 2 months supply of the vehicle-on the ground, at the dealership. Manufacturers and dealers track this continuously, as anything on the high end can mean higher expenses for the dealer in storing (or paying floor plan expense-a fancy word for the loan the dealer holds and pays interest on for this inventory). It can also mean that sales rates for this vehicle are not according to forecasts, and this then typically gets the attention of the incentive planners, and dealership management.
If a particular model hovers near 30 (or 1 month), this means this particular model is at an alarmingly low availability. What this will translate to, for you, the shopper, is little to no chance of negotiation on price, low likelihood for any purchase or lease incentives, and a resulting "sellers market" for that vehicle. Of course the opposite is true. A higher availability of, say, greater than 75 days or so of a particular model, can mean high bargaining power, and the likelihood of more manufacturer and dealer incentives to move that vehicle into a consumer's hands.
In a recent article, Kelley Blue Book (Source: KBB.com, "This Week in Car Buying", March 16, 2018), a comparison of 2 competing and leading volume passenger cars, Toyota Camry & Honda Accord, was discussed, in terms of their relative availability. The positions of the brands in offering various lease incentives - or not - and how this is impacting the supply of these models is described;
"Not matching incentives is apparently costing Honda some sales as Automotive News reports that the model currently stands at a 104 days’ supply—in other words it would take that time for the auto maker to sell all the Accords in stock at the current sales rate. The trade paper reports that the company has 86,000 of the vehicles in stock. Toyota doesn’t break out its inventory by model, but across all its car lines, it has a 61 days’ supply."
While frequently this kind of information risks coming across as white noise to shoppers, it can make all the difference when it comes time to buy.
This is where The Car Maven team can help. We help steer you to the best value. We track and stay up to speed on industry insights such as this, so you don't have to. We advocate for you, in an #authentic, #unbiased, and #simplified way. That's what we're here for.
Read the entire article here: https://www.kbb.com/car-news/all-the-latest/this-week-in-car-buying-honda-accord-vs-toyota-camry-part-2/2100005247/
The Car Maven