Normal inventory level is a 60-day supply of vehicles on dealer lots. Photo by Patrick T. Fallon/Bloomberg

Reader asks about vehicle pricing

Wheels:

Ralph asks by email: “I am seeing a lot of cars on the lots at dealerships and used car lots, but it appears that the prices are not coming down. Why not? I thought it was the basic economics that if there is a lot of supply, then prices should go down.”

Halderman:

You are correct that inventory levels are higher now than normal due to slightly slower sales of new vehicles. What you are seeing locally may just be your local area. Normal inventory level is a 60-day supply of vehicles on dealer lots. That is a lot of vehicles because according to Automotive News, about 95 percent of buyers purchased vehicles from the inventory on a dealership lot. Only about 5 percent order a vehicle that meets their needs.

Sales are also hard to estimate because they often depend on weather and other factors that are hard for vehicle manufacturers to predict. For example, a hard, cold winter often causes new and used car sales to drop. You are correct that if a vehicle is in inventory for longer than 60 to 90 days, dealers will often reduce the price so that it sells.

There are many online resources to choose from when looking at a new or used vehicle. When comparing vehicles from different dealers, make sure that they are similarly equipped. Most brands of vehicles come in three or more trim levels. The higher the trim level, the more standard equipment is included in the package, and the higher the price. Besides trim level, another factor that affects the price of the vehicle is the color. At dealer auctions, I have seen the same vehicle bring several hundred dollars less or more depending on its color. Therefore, there is no real answer to your question. It really does depend on many factors, and the wise vehicle shoppers should research what they need and want before visiting a dealer or private owner.

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