Cars are “stamped” at a global pace, each manufacturer strives to produce as many units as possible in order to sell them later. It is understandable that the automotive business is one of the most profitable. However, not all machines can be sold, especially now, when the price of them is inflated due to the foreign exchange rate! These are "black days" for the manufacturer. Ever wondered where the unsold new cars go? After all, sometimes there can be very, very many of them ...
To begin with, I want to show you the "fields" of new cars, these photos were taken not so long ago in different parts of the world. And here not only Europe, but also Russia.
Of course, marketing agencies that work for manufacturers almost always accurately calculate the required amount, plus or minus a small percentage. However, there are "surprises", as, say, in 2014, when currency rates began to rise and, accordingly, pulled the prices of cars. They simply become inaccessible and therefore they begin to be abandoned.
How the market is stimulated
There are several tricks that will force you to always buy a new car, and sell your own, say, in 3 - 5 years.
1) It's kind of technical obsolescence, especially now in the digital era. Put another dashboard or a radio tape recorder and all the update. Then spy photos are launched, which only fuels the interest of the audience.
2) Special installation of technically obsolete units. A simple example for clarity - by all of us beloved Hyundai Solaris, the machine is not bad - BUT! Did you know that 6 stepped box(both automatic and mechanical), which appeared in Russia only this year, appeared in the United States at the launch of the model? And we specially installed an automatic machine - 4 gears (frankly old) and not so fresh 5-speed mechanics. All this is a clear plan, after the people "got enough" of these cars, then news appears - we "specifically" worked on the car, changed it and now there are new transmissions! Yeah, which were staged in the USA three or four years ago? What didn't you install right away? Thus, the manufacturer encourages you to sell the old (imperfect) SOLARIS and buy a new one! And so year after year.
3) Putting the term of operation into the technical component. Did you know that many billionaires ride old cars? And they don't need new ones! This is because the new ones have their own service life, about 100 - 200,000 kilometers, then they begin to crumble, and "godlessly" and from all sides. Which also pretends you to buy a new warranty car.
The manufacturer will never give in
No matter how “bad” the manufacturer is, he will never concede in price, although it seems logical at first glance. That is, if the product is not for sale, take and lower the price for it, to a “pleasant” one for the buyer - but manufacturers and even more so dealers will never agree to this. Even if the fields of unsold cars remain. And there are a number of reasons for this:
- Let's say you have lowered the price of a C-class model in your line, then they will start buying it, but the rest of the cars, and especially, will not be sold. Because they are approaching this "discount program" - it means that they also need to be reduced in price.
- If you downgrade once, people will get used to it very quickly, then it is quite difficult to return to the previous level.
- The dealers also bear “damage” from discounts, you can't earn much on “discount” cars, and I know this firsthand.
- It will not be possible to raise the prices of cars every year.
- Enterprises will stop.
In general, it turns out a vicious circle, the manufacturer produces in the same volumes - dealers order cars, but they do not buy them and they crowd in "parking lots" - but they will not sell them at discounts. The "flywheel" of the car market is just spinning, and it is not so easy to stop it, because there are thousands and thousands of jobs, including those adjacent to the auto industry.
So what happens to the machines at the end
You know, there are still many secrets here, manufacturers do not like to talk about it, because they will somehow need to justify their “greed”. But there are only a few options and they are subdivided into several levels.
1) When there are few cars left, but the brand (model) is liquid. They just run stocks, usually under New Year, probably, many people bought cars with winter tires or a super New Year's price. This is the first most innocuous move.
2) When there are a lot of cars left, and the New Year's promotions do not work (“illiquid” brand). Here workers of industries, family members, etc. are connected. Thus, they are selling at a decent discount, but in a narrow circle, only for their own people! Without too much hype.
3) What to do with a lot of unsold new cars. This usually happens due to a mistake in the calculations of marketers. It is already difficult to sell both by “shares” and by “own”. Such cars are often disassembled, the units are put into production of other cars, the bodies are often under the press. It is worth noting that this happens quite rarely, some Japanese and European manufacturers have had cases, but again, no one advertises this information. Because it is very swipe on the prestige of the brand.
Have you ever wondered if car dealerships have time to sell all the cars? Think: in 2015 alone, companies around the world produced more than 68 million cars - and they are unlikely to be sold out. What you'll see in this post is just the tip of the iceberg. There are still many such parking lots in the world filled with brand new cars. If you think that this is all Photoshop, you are wrong - all the pictures are genuine.
So, we will talk about the so-called "cemeteries of new cars" - parking lots where unsold cars are stored.
For example, a parking lot not far from the Nissan plant. Just think how many cars there can be!
It would be logical to sell them at discounts. However, automakers are not making concessions. They want to get back every dollar spent on their creation. In addition, if you throw a couple thousand dollars off each car, others expensive cars will be left without a buyer. Automakers have to buy more and more land in order to place the accumulating leftovers there.
Huge playgrounds with brand new cars. Automobile companies cannot stop the assembly line, because then they will have to close factories and lay off thousands and thousands of workers. In this case, by the way, the domino effect will begin - steel plants, whose products are used for the manufacture of car bodies, will be ruined, and a bunch of other enterprises that manufacture components and assemblies will be closed.
Unsold cars parked in Sheerness, UK.
This is a large car park in Swindon, UK, where cars are piled up and no buyers are visible.
Tens of thousands of cars have been produced in factories every week for many years, but not all have been sold. In developed countries, almost every family now has at least one car, so why do we need new ones? It is much more profitable for the consumer to carefully use an already purchased car and give it to a car service for, say, body repair than buying a brand new car.
57,000 vehicles awaiting sale in the Port of Baltimore, Maryland.
And this is Russia. There are now thousands of cars on the runway near St. Petersburg. They were brought from Europe, and nobody needs them. The airport also cannot be used for its original purpose.
Sad to admit, there is no real solution to the problem. Therefore, cars continue to roll off the assembly line and go straight to parking lots where millions of other vehicles are already stored.
Some families may change their cars annually, but most prefer to drive what they have. The proof is in front of your eyes. Millions of cars roll out of the factory gates and end up in the parking lot forever.
Parking in Valencia, Spain.
Brand new Citroen cars in Corby, England. They are brought here from France every day, and from the day they arrive, they have nowhere else to go.
This site is where new Toyota, covers 60 hectares in Long Beach, California.
And these are the new Ford pickups in Detroit.
Parking lot in Bristol.
New Land rover Freelander awaiting departure at the port of Liverpool
British Rover 75s gather dust in a warehouse in China.
Thousands unsold Honda cars in Japan.
Where is the exit? Car manufacturers are constantly developing new models with the latest technology. Unsold two-year-old cars no longer have a chance to find a buyer. They have no other alternative but to be disassembled for parts or crushed under pressure.
Some of the auto giants have moved production to China, such as General Motors and Cadillac. Unfortunately, cars produced in China under an American license are not in demand in the United States in the same volumes. Now sites in China are packed to capacity with such brand new machines.
The number of unsold cars in the world is growing every year. What happens to cars that, for some reason, were not in demand by consumers?
The recession continues. What you see in this article is just the tip of the iceberg. There are still many such parking lots in the world filled with brand new cars. If you think that this is all Photoshop, you are wrong - all the pictures are genuine. For example, 57,000 vehicles are expected to be sold in the Port of Baltimore, Maryland.
You see thousands upon thousands of unsold cars parked in Sheerness, UK.
This is a large parking lot in Swindon, UK, where thousands of cars have piled up and no buyers are visible ... Carmakers have to buy more and more land in order to place the accumulating leftovers there.
It would be logical to announce discounts. However, automakers are not making concessions. They want to get back every dollar they spent building these machines. Plus, if you throw a couple thousand dollars off each car, other expensive cars will be left without a buyer.
You see huge areas with brand new cars. Automobile companies cannot stop the assembly line, because then they will have to close factories and lay off thousands and thousands of workers. In this case, by the way, the domino effect will begin - steel mills, whose products are used for the manufacture of car bodies, will be ruined, a bunch of other enterprises that manufacture components and assemblies for cars will be closed.
This is a parking lot not far from the Nissan plant. At the time of this writing, all these cars were in place, no one had bought them. Some of them, probably, have already been processed for spare parts.
Tens of thousands of cars are produced in factories every week, but they are hardly sold. In developed countries, now almost every family has a car, or even two or three, so why do we need new ones? It is much more profitable for the consumer to carefully use an already purchased car and give it to a car service for, say, body repair than to buy a brand new car.
And this is Russia. There are now thousands of cars on the runway near St. Petersburg. They were brought from Europe and now nobody needs them. The airport also cannot be used for its original purpose.
The usual “buy-use-buy” cycle has been broken, now only “use” is in progress, without buying. Again, you see thousands of unsold cars in Upper Hayward, Beachester, Oxfordshire. By the way, the owners do not have enough space.
Sad to admit, there is no real solution to the problem. Therefore, cars continue to roll off the assembly line and go straight to parking lots where millions of other vehicles are already stored.
You will be surprised, but on our planet more cars than human beings, nearly 10 billion pieces. We are already getting close to them. You see several thousand brand new Citroen cars in Corby, Northamptonshire, England. They are brought here from France every day, and from the day they arrive, they have nowhere else to go.
So they stand there, brand new cars with zero mileage. This is a fresh May space view of unsold cars in Corby (Northamptonshire).
The production of more and more cars that cannot be sold, contrary to logic, needs and economic laws, continues every day. every week, every year for many years.
Around the world, stocks of unnecessary cars are piling up. There are more and more of them, and the end of the edge is not visible to this process. Economists argue that consumers don't have the money to buy new cars. The problem is that "old" machines now serve for a long time, but we cannot refuse to produce new ones. We are running out of storage space. Moreover, we don't even have anywhere to ride them!
Gone are the days when families bought new car every year, now people use what they have. Some families may change their cars annually, but most prefer to ride the old ones.
The proof is in front of your eyes. Millions of cars roll out of the factory gates and end up in the parking lot forever.
These cars were left here to deteriorate. It doesn't look like anyone will buy them. In any case, over the past 12 months, there have been no changes in this parking lot, and a long stay without movement is destructive for cars. Condensation begins to accumulate in the cylinders, this process is called cold metal corrosion. Now you can't just start the car so as not to damage the engine. Air starts to come out of the tires, and the batteries sit down. The list of malicious processes can be continued.
So how do you stop this epidemic? Where is the exit? Car manufacturers are constantly developing new models with the latest technology. Unsold cars, two years old, no longer have a chance to find a buyer. They have no other alternative, how to be disassembled for parts or crushed under pressure. Some of the auto giants have moved production to China, such as General Motors and Cadillac. Unfortunately, cars produced in China under an American license are not in demand in the United States in the same volumes. Now sites in China are packed to capacity with these brand new American cars. For now, the Chinese cannot afford this luxury, so they have to wait until the economy recovers, which can take several generations.
Or some other misfortune, the automaker always faces the danger of re-release. Marketing tools allow you to fairly accurately calculate the required volume of production, but force majeure is an unpredictable thing, so large volumes of unsold cars often accumulate in warehouses. And then the plant either suspends or concentrates on other models, but the "extra" cars will never return to their place of birth.
Having entered a dealer, models that are currently unpopular with customers are deposited in the warehouses of the automaker and car dealerships. As you know, car sellers of mass brands buy dozens and hundreds of cars for future use even before the crisis comes, otherwise customers will always have to stand in queues or refuse too popular cars. During a period of stagnation, many buyers abandon their intentions, and unsold vehicles end up in warehouses.
If the popularity of such cars falls too much, then manufacturers and dealers begin to attack customers with discounts and various special offers. The machine can stand for a year before it has new owner... There are cases when a vehicle was sold at a discount at half price after four years of inactivity! But not a single car in the world that has not been sold for one, two, three or even four years will be scrapped, put under pressure or drowned in the sea like an orange during the Great Depression. And we'll explain why.
Some people naively believe that the process of making a car is no more difficult than sculpting a kolobok by a seven-year-old child. There are many who seriously think that after a visit to the dealer, the manager immediately sends the application to the dealership, and it sends the lightning to Japan, where poor workers, having lost their lunch, immediately rush to collect the ordered car. Whatever it is.
Automakers try to keep a certain time delta between ordering a car and handing it over to the customer. Typically, this is about two months. This is how everyone is maximally insured against overproduction. If, however, an unexpected correction in the form of stagnation in sales crept into the forecasts of the marketing department of the dealer and the automaker (here they have double control), then this delta may increase by weeks or even months. But then everything returns to normal. Even the Russian AVTOVAZ switched to the preliminary system. This does not mean that customers will always make orders: they, as before, will choose cars in the dealership from the availability, but dealers will have to calculate how many cars they need to buy for a given month.
We used to think like this: a long time ago, all Russians buy a car for three years until the warranty period expires, and then they sell and buy a new one. Many, they say, change the car once a year or even once every six months. There are such cases, but in general this is a delusion. For example, in 1969 in Western countries average age the car that could be found on public roads was 5.1 years old. According to statistics for 2013, the average age of the car has now grown to 11.4 years! So for the most part we drive very old cars. And these figures are also applicable to Russia, because before one family was proud of the purchase of a car as such, and now each family member can be proud of their credit BMW X6.
And yet there is some deception in these sales. Automakers have a concept called Yellow Stock. These are the machines that do not want to find an owner for a long period of time. Dealers and automakers start to seduce with huge discounts, and 99% of the time the buyer is found. The remaining percentage is called Yellow Stock.
The dealer has many ways to solve this “yellow problem”: some put the car on the license plate and sell it through the system to avoid red tape with accounting records, some distribute it with an even greater discount through employees, but about some kind of recycling or returning the car to the factory for disassembly for spare parts is out of the question. For some companies, Yellow Stock sometimes reaches 30%, however, after a while, all these cars somehow "merge" and even get into the statistics officially. After all, a car is one of the most demanded goods, which practically cannot bring a loss.
Everyone is accustomed to watching in life and more often in the cinema dumps of cars, where old cars rest, which have fallen into disrepair and scrapped by their owners. But where do the unsold new cars go? It is clear that not all cars that come off the assembly line are sold. Manufacturers do not count on this. Moreover, when the release of a certain model comes to an end, the demand for it drops sharply.
Locations of new unsold cars
Cars roll off the assembly lines of car factories on a global scale. Any manufacturer strives to produce the maximum number of cars for sale. The reason for this is clear - the automotive business is one of the most profitable today. But not every unit of production can be sold, especially at the moment when the exchange rate of foreign currencies is unstable.
New cars that have not been sold cannot be scrapped. This is disadvantageous for manufacturers who have spent a lot of money on the development of models and their subsequent production. The lack of demand for certain cars results in the opening of special parking lots. These fields, where unsold cars "survive", are found in almost every country that has car factories. Russia is no exception.
Here are the most famous of these sites:
- Near the manufacturer of the Renault-Nissan concern;
- A similar parking lot in the British Sheerness;
- State of Maryland, Port of Baltimore;
- Russian "cemetery" not far from St. Petersburg;
- Toyota's 60-hectare parking lot in California;
- The Ford parking lot in Detroit;
- Honda parking lot in Japan;
- The Spanish city of Valencia.
Some auto giants, especially American ones, at one time moved production to China and other Asian countries in order to reduce the cost. But the demand from this has not increased, and now fields with unsold cars from the United States are everywhere observed in Asia.
Marketers working for car companies, until 2014, the number of cars that needed to be produced was fairly accurately calculated. Of course, part (an insignificant percentage) was destined to end up in parking lots. After 2014, car prices skyrocketed and people began to ditch certain models in favor of cheaper options.
Stimulating the global automotive market
The manufacturer will never follow the buyer's lead and will not reduce the price for new car Machine manufacturers expect buyers to have vehicle want to buy a new one. The approximate term of use is three to five years. It is for this reason that new car models are released at approximately the same interval.
There are several not entirely fair tricks that companies use to stimulate demand for their products in the market:
- technical obsolescence of models;
- deliberate installation of some legacy nodes;
- artificial limitation of the operational period.
Obsolescence of certain models is a great marketing ploy from an automaker's point of view. Examples include upgrades such as replacing the climate or audio system. An insignificant detail is changing, which practically does not affect the operation of the car, and all this is presented to potential customers in the form of an innovation that can give the buyer a new look at the car.
Installing technically outdated nodes is another trick that deserves attention. Interesting story was with a good model Solaris from Hyundai. Six-speed automatic transmissions and manual transmissions appeared on the model in Russia not so long ago, while abroad these transmissions have been sold since the very release of the first Solaris. After a car with a four-speed automatic transmission was launched in Russia and people who bought Solaris for themselves ceased to admire the excellent and inexpensive car, the manufacturer stated about “ new development". There was a kind of restart, and Solaris again entered the TOP sales. And this is just one example.
As for the operational period, it is initially laid down in the technical component. The average service life of a car engine without the need for major repairs is about 150-250 thousand kilometers. After that, the engines start to break. Overhaul power units some models can be really expensive. It's easier to buy a new car.
This technique began to be applied around the mid-80s, when manufacturers realized that it was extremely unprofitable to produce reliable and durable cars with engines capable of driving millions of kilometers without overhaul. Until now, many people prefer old "old school" cars to new ones. Legends of the American car industry - Ford Gran Torino, Chevrolet Impala, Dodge Charger and many others - can be cited as an example. And there are examples in the automotive industry in almost every country.
Automotive manufacturers' perspective
It would seem just a pattern. Take a closer look: these are millions of dollars! Following common logic, the manufacturer only needs to reduce the price in order to sell off the leftovers. But no one will ever concede in price. No one will ever take such a step for a number of reasons:
- If you reduce the cost of a certain model, models with a lower class will not be sold.
- People quickly get used to good things, and will again wait for sales.
- Dealers' direct losses from the sale of discounted cars will increase.
- The inability to raise prices for products annually, as is the case now.
- Gradual shutdown of enterprises.
The embodiment of the principle of impossibility of price reduction leads to a real vicious circle. Cars leave the assembly line in the same volume, but are not sold, remaining in the parking lot. But there is no need to wait for a sale. The car market is cyclical, and this cycle is almost impossible to stop, if only because otherwise hundreds of thousands of people will be left without work.
Ultimately what happens to unsold cars
There are legends around this, most of which are partly supported by the manufacturers themselves. The latter do not reveal their secrets. There are several options:
- pre-holiday sales of liquid car brands;
- sale at a discount for employees of the enterprise and their relatives;
- analysis of cars for parts.
Each of these steps is a forced measure taken by the auto industry when the mistakes of marketers in the calculations lead to surpluses, which then cannot be sold.
The fate of new unsold cars is to be parked forever. And although manufacturers try not to advertise this, they will never mass-market these machines. Otherwise, the brand will only lose its prestige, and the company will suffer serious losses.
