Here's today's riddle: how can something that's sold still be for sale? The answer: easy, if it's a car.
Chrysler just announced that it convinced its dealers to take their quota for the month, which on the surface looks like things are going well. I'm surprised at how many people don't know just how the sales numbers work.
In short, when the auto companies release their sales figures each month, those aren't necessarily vehicles that are sitting in driveways with their satisfied new owners. Rather, some of those cars -- and I'd hazard a guess that some months it's most of those cars -- are sitting on a dealer's lot somewhere. As soon as a vehicle rolls off the assembly line and gets driven out the factory door, it's counted as a sale. The fact that it may not carry a license plate for another several months doesn't matter.
Here's how it works. Automakers may talk about "our customers", but they don't sell cars to the public. None of them do. Instead, they sell cars to their franchised dealers, who then turn around and sell the cars to the customer. The automaker's customers are the dealers. The dealers' customers are you and me.
The dealer usually pays for them through third-party financing, such as a bank, and carries the interest on them. That cuts into profits, so the longer the car sits, the less money the dealer makes. That's why you can usually cut a far better deal on an in-stock unit, especially one that's been around for a while; the dealer wants it off the lot, and more importantly, off the books.
I used to work in dealerships, and we could always tell when the company wanted to look good, usually near the end of the month: the delivery truck would show up with a load of vehicles we hadn't ordered, but which we had to take. (Kick up a fuss about it, and then when you really wanted a vehicle, especially a hot model that everyone was buying, you'd discover you'd been moved to the back of the line.) Then, when the sales figures came out, the manufacturer would be crowing about how well sales were going. And we'd shuffle the stuff already on the lot and try to make more room. You never knew if they were on a roll and we'd get even more to add to the ones we still hadn't been able to sell.
