Where have all the deals gone when there are thousands of unsold cars.?

What happenned ? Where did that deal go.?

Written by one of our Broker Panel this is an amusing insight into the day to day tribulations of arranging car finance for clients and the hoops that a Broker has to jump through. One question that comes up time and time again is the one of why does a deal only last such a short time. Surely there are thousands of unsold cars, any customer being prepared to bite would be great news in this climate surely?

Life is not that simple......

Q) I've seen some great great deals but when I have enquired after a few days I've been told that the deal is no longer valid. or I've received a great quote but been told the deal may finish tomorrow so I need to send in my finance application today or possibly lose it even though I know my local dealer has stock of these cars.

Why is this and are they lying to get me to make an application immediately after all there must be thousands of cars sitting around waiting to be sold?

A.) I get asked this type of question all the time so I've tried to include several questions in the one as they are all linked.
First of all there is an element of marketing involved in what the broker or dealer is saying. Of course they want you to take the car and send over a finance application as soon as possible to stop you from wandering off and doing a deal with someone else but in most instances what they are saying is true.

You see the manufacturer may want to push out a particular model or models of their range so they make available to the dealer and/or the leasing companies an extra bonus which could be several thousands of pounds. After adjusting the new on the road figure the brokers and dealers feed this new information into their computers and arrive at a stonkingly good rate and market it, or one of the leasing companies will take these new terms from the manufacturer and, after calculating a new rate, provide some great rates to the dealers/brokers for them to market to their database or via advertising.

Whilst all this is going on the re-marketing department of the leasing company (the people who are responsible for selling the cars at the end of the lease and setting the future values) are happily nibbling their Hob Nobs whilst sipping Earl Grey in the backroom oblivious of the fact that they are likely to receive back 200, less than desirable, Subaru Imprezza within a period of 2 weeks in 2 years time when all of the cars just ordered are returned.

Hearing the news the Hob Nobs go flying, tea covers the floor of the office and a less than happy MD phones the wages department to get them to prepare a stack of P45's. In the meantime the deal is either pulled with no notice at all, or rates increase by £50 per month as the computer is adjusted to reflect the more likely price that the leasing company will achieve in auction when large batches of Imprezzas are sold all at once.

In the meantime the broker/dealer has to now pacify his clients and maybe look for another leasing company whose rates are similar to the original rate. Trust me, it is difficult, going back to clients to explain that you have been forced to use another funder and the rates have therefore gone up by £15 per month or tell customers that have taken the family out for a test drive in the car over the weekend and fallen in love with it that the deal is no longer valid.

So even though your local dealer may have stock of the car or there are fields of them held by the manufacturer the deal may still end abruptly.

On the question of stock at a dealer, the rates that are marketed are often dependent on the finance company squeezing every last penny out of the deal which includes the dealer discount but not all dealers will provide the same discount to the leasing companies so the leasing companies tend to have preferred dealers that give them the best discount and the best service.

So even though your dealer has stock of the cars they may not be prepared to part with them to the preferred dealer or increase their discount in order to sell them. As the recession bites there is a belief that rates will tumble as manufacturers use leasing to mass move stock. This simply isn't true, where you see large numbers of cars in fields (and if you look closely at the same shot that they roll out in the news nightly they are probably Ford Sierras - the film clip used in the last recession) the manufacturers will be negotiating deals with the large corporates in order to move the cars in one or two deals rather than try to move them individually.

With some car manufacturers stopping production for up to 4 months I see a huge shortage of new cars and fewer great deals than we saw at the end of last year. The Message: If you see a great deal grab it there and then, get your application in straight away to avoid disappointment.