Buying new car at distress prices?

Question

Ford and GM report sales of vehicles declining 32% compared to last year. I would suppose that foreign car makers (such as Honda) would report substantial declines as well.

I expect, therefore, that many car dealers would fold.

My primary reason for being interested in this is my my wife's car is by now 10 years old and she deserves to replace it with something newer.

So, my thinking goes, would I be able to find a liquidation auction of any new car dealer and buy a car at a considerable discount to a "new dealer price".

How is inventory of failed car dealers, disposed of?

PeterL · Accepted Answer

Judging by RV dealerships closings, yes there are liquidation sales.I have not seen this from car dealerships yet.

John A. Weeks III · Answer

Cars are generally on "floor plan". That is, the dealer takes the car and pays interest on the car for each day it sits on the lot. Once the car sells, the dealer has to buy it from the finance company. If the dealer goes toes up, the cars would go back to the finance company, and be sent out to other dealers for sale as new cars. Used cars would go to the auto auction and be bought by other dealers.

So far, I haven't seen any distress sales despite a dealer a day going out of business in Minnesota in recent months.

-john-

Buying new car at distress prices?

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