there are so many dealerships closing around me. so what happens to the cars on the lot? do they auction them off or return it to the manufacture?

could the average consumer take advantage of the closing?

 

An excellent question. As I understand it, there is no one hard and fast rule. Just who owns the cars on the lot, and how or if they get sold off or returned to the manufacturer, depends partly on the terms of the franchise that the dealership originally got with the manufacturer. But, since, in most cases, the shipping charges getting the cars originally from the plant to the dealership have already ben paid, and are not recoverable (that money, of course, goes to the trucking, railroad, and container-ship companies), it is highly unlikely that manufacturers would have the cars shipped BACK to the factory and them have to turn around and ship them right back again (for more charges) to another dealership...or from one dealership directly to another. So, my guess is that, in many cases, the dealership would want to unload them on the market ASAP....there could be some good deals to be had. But each dealership, of course, is different. Some may, as you note, choose an auction; some may donate them so the owner could take it off his or her taxes (always a factor in bankrupcy), and some may simply sell them off to other local dealerships.......especially if there are cars on their lot that customers at other dealerships want, but those dealers don't currently have in stock.

This is an excellent topic. Do any of you CL members work at a dealership (or are part of management) and have any first-hand knowledge of these procedures? I myself have not shopped, nor shopped with other car-buyers, at a going-out-of-buisness shop. Often they shut down very quickly, and the cars are there one day and gone the next. A lot of people are also afraid to buy from a place that is going out of existance, figuring that the next dealership down the road may not give them the same level of service than if they had bought their car there.

 

when a nissan dealership closed down around here, i think they took away all the cars back to manufacturer lot. that's what i heard

 

There was a brand new $30+ million dollar Toyota Dealership in my area that shut down before its grand opening. The cars were there one day and gone the next. I find it hard to believe that they would sell them to another dealership since they had so many. Auction maybe?

 

My guess is that the manufacturer takes the franchise back, as well as the cars, and assigns the cars to a new franchise. The cars only have to be relabeled and moved to a new location.
Or,
The cars could just go to a dealer near the failed one.

 

The cars get allocated based on where they will sell (based on past numbers). Lexus will not send a red LX to a dealer that always sells blacks ones. The cars will get moved around the general region.

I believe the maufacture takes the title back and then changes it to the new the dealer.

 

I would be surprised if they got shipped back to the factory. That would be an additional shipping charge.....and yet another one if it goes back from the factory to yet another dealership.

Pagemaster's post, above, make a little more sense.....that they would get moved around the region as demand dictates.

 

The most likely scenario is that they are sold off to other dealers in the region.
I work at an Acura dealer and on a few occasions, we have sold excess inventory to a number of dealers who were short on inventory. Each time, we would sell one full truck load (8-9 cars). This transaction is the most efficient and cost effective way of unloading unneeded cars. This way, you don't sell them at a loss even though no profit is being made (sold at dealer invoice).

 

dealers don't typically own the cars on their lot. they're 'financed' either by banks or the manufacturer... the dealer pays for the car each month it's on the lot, which is why they're eager to sell cars. so if a dealer closes, the cars typically just go back to the manufacturer's regional distribution center.

a dealership closing is not like a circuit city or furniture store closing.

 

Yes I think we've had a variety of situations locally near Silicon Valley leading to dealerships closing including dealers selling Toyota, Buick, Hummer, GMC, Jeep, Chrysler and Lincoln/Mercury. Some of the closures were planned with fairly long lead times.

 

At the Honda dealer I work at, any cars that we have excess of get dealer traded, sold to another dealership, or a car finding service buys them and gets shipped to auction.

 

I don't know about all manufactures but Toyota dealers have to pay the manufacture for cars until they are sold. The faster the dealer sells the car, the less interest the dealers pays on the vehicle. When the vehicle is sold, Toyota provides the finacing for the individual. If the dealer sells the car $10,000 below cost...the dealer is the one who pays this $10,000 below cost difference.

In the USA...Toyota USA, Gulf States Toyota and Southeast Toyota are distributors or where and how Toyota's get move around. Back in the day long before Toyota became really popular..Toyota did not have anything to do with the distribution of Toyota. The distribution of Toyota was franchised out. Toyota bought most of the distribution companies and now does it themselves except for Gulf States and Southeast.


You will not see a Toyota Tundra in Wisconsin moved to a Toyota dealer in southern Texas. The vehicles in Texas will move around within the dealers in Texas.

The very first owner of the vehicle is the dealer.

 

Yup. And yes, dealers aren't at all like a retail joint. New cars would never be "liquidated" until all are gone.

 

My buddy owns the Acura and Lexus dealer local to me and from what I recall Lexus and Acura own the cars until they are sold. They, to the best of my knowledge, don't pay until they are sold.

 

We just had the local Mazda dealer get shut down by the "bank". Middle of the day, surprise to everyone. The "bank" was BMW financial services and as with most dealers they were providing the floorplanning for this dealer. Basically they provide the money and need to be repayed when car is sold. If not sold they own the stock.

Not sure what they would do with it but I assume auction to get most $ possible.