Serves the Commercial Small Fleet Market of 10 – 50 Vehicles

Unprofitable Models Hit Dealers' Bargain Bins

November 15, 2002

Bargains on discontinued cars and trucks are popping up everywhere as Detroit's automakers close factories and eliminate slow-selling andunprofitable models, according to the Detroit News.According to the News, the phenomenon has taken hold on Oldsmobile dealerships around the country since General Motors Corp. announced in December 2000 it was killing the brand after the 2004 model year.Lincoln Mercury, in addition to killing the Blackwood, stopped producing the Lincoln Continental sedan, Mercury Cougar coupe and Mercury Villager minivan this year. The News said steep rebates have become necessary to sell the remaining stock.The price cuts are happening even as car buyerscontinue to take advantage of zero percent financing. Fueling the trend is an entrenched business model that penalizes dealers when slow-selling cars and trucks go unsold. Dealers finance the cars and trucks on their lots and pay back the loans after each sale. Unsold vehicles mean expensive interest payments."Dealers get nervous about discontinued vehicles," said H. Carter Myers III, a Virginia dealer and chairman of the National Automobile Dealers Association. "We cut the price to make sure we don't get stuck with them.”
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