How do dealers manage demand and supply?
Discussion
I'm curious how car dealers manage demand & supply. I used to think if a customer placed an order the dealer would send it to the factory who would slot it sequentially, but I understand that dealers get "given" a chunk of build slots per month/year, and they have to manage within that. Who decides how many they get given and how flexible it is?
Just interested how it works in a very volatile demand world, especially when factories want to keep things as stable as possible.
Just interested how it works in a very volatile demand world, especially when factories want to keep things as stable as possible.
Does it not differ by manufacturer and model life cycle? My last BMW orderd in June 2022, took 7 months to arrive as it went into the queue. When talking about its replacement, I've been told that IF I want non standard or individual colours I could be looking at another 3months - although lead tines seem to have reduced a ton!
Very much depends on the marque and size /status of main dealer and the car itself.
Perfectly possible ( ignoring Covid type scenario's ) to buy a brand new car off the forecourt but equally as you say often factory orders - the differentials being usually what degree of spec and /or colour is required.
Over the last few years I have bought a brand new Audi from the forecourt and also a number of factory orders.
Perfectly possible ( ignoring Covid type scenario's ) to buy a brand new car off the forecourt but equally as you say often factory orders - the differentials being usually what degree of spec and /or colour is required.
Over the last few years I have bought a brand new Audi from the forecourt and also a number of factory orders.
There are always factory orders and general orders.
You get the anal PH'er putting in specific specs wanting competition packs etc. Then the UK concessionaire will have the general orders for the cars that sell the most - some priced/spec'd for typical lease deals etc. Obviously the dealer would prefer to sell something from existing stock, but they can draw on central stock or put in a factory order.
You get the anal PH'er putting in specific specs wanting competition packs etc. Then the UK concessionaire will have the general orders for the cars that sell the most - some priced/spec'd for typical lease deals etc. Obviously the dealer would prefer to sell something from existing stock, but they can draw on central stock or put in a factory order.
My first new car is now just over 4 and a half years old, i wanted a specific colour with a wheel upgrade so it was always going to be a factory order. The order was placed late September 2019 and i got it in the middle of Jan 2020.
That car is soon to changed and the replacement is absolutely bog standard in boring silver, even that has had to be factory ordered. Order was placed late june and i had an email at the weekend saying it had been built and will be ready in early september.
That car is soon to changed and the replacement is absolutely bog standard in boring silver, even that has had to be factory ordered. Order was placed late june and i had an email at the weekend saying it had been built and will be ready in early september.
matt21 said:
I'm curious how car dealers manage demand & supply.
It's not really the dealers that manage supply and demand, that comes down to the market and how the manufacturer anticipates what the demand is going to be that it has to supply. This is estimated in advance, and can go very wrong.I used to sell BMW. At the time, every car was built to order. A customer places an order, and the car with their chosen specification gets built. Nice and straight forward. Here's the snag. The dealer has an allocation. They have to take x amount of models and configurations, not all of which are big volume sellers. Cars can get to a point in production when the dealer has to choose the specification, where a customer is not yet present. As an example, back in my day that meant if it was an X5 for example, we made sure it had auto and lather specified (both options) and a sensible colour. You know, something that would easily find a buyer once in stock.Some options were essential, other avoided. Yes, dealers would have to order V8 5 series and 7 series without customers present.
When I found myself at Ford, it was a different story. We would get information on things like build numbers. What I didn't know until then is that a set amount of colours were produced by the factory. So we could see for example, with say a Fiesta, 10,000 in Silver, 5,000 in Black, 1,000 in Hot Magenta, etc. There, when it's gone it's gone. Yes, you could put options on a car, (always discouraged) or just get the next trim level up. I do remember a time when we were being encouraged to have customers downgrade KA from Zetec to more basic models, as they were not selling but were still being built.
It's probably very different today. Demand is slowere, and models diminishing. I'm not convinced the industry has fully recovered from the chip crisis, and so now I would expect a lot (not all) cars to be built to order. From a manufacturer perspective, BtO is better as it avaoids holding costly stock, and the need to discount.
My expierience at BMW was we were allocated a number of build slots for different models then as a salesman we had to sell the slots and spec the cars. anything getting close to a final fixed build spec time would be spec'd as a demonstrator (normally silver with black leather or Bristol spec as we called it) and would then become saleable as that fixed spec or arrive and be registered as a demo
Americans, who have much bigger dealerships and much more space, find the idea of a car being built to customer order almost laughable. They've probably got a row outside for you to choose from or photos of what's available at other dealerships in the same group. Some limited "dealer fitted options" and that's about it.
On the other hand if a model is popular you'll probably have to pay more than manufacturer's list price to get one and might have to wait as well! Ford Bronco is a classic example.
On the other hand if a model is popular you'll probably have to pay more than manufacturer's list price to get one and might have to wait as well! Ford Bronco is a classic example.
Most of the above is correct. But dealers also manage new car supply but stuffing the punter in a car they don’t want by heavily discounting the sale. This may not happen so much any more.
But say you want a 320d saloon in silver they could order one from the factory in that spec or stuff you into a red 320i for less money that’s current gone fully paid and is physical I. The showroom . And the salesman’s job is to persuade you that this is the best option.
Manufacturers request allocation of all models from the factory and sometimes are asked to request more, and some times told to take more like at Nissan where the Russian made right hand drive Xtrail were destined for another market but ended up in the Uk with a couple of software tweaks.
But anyway the real money is in used cars.
But say you want a 320d saloon in silver they could order one from the factory in that spec or stuff you into a red 320i for less money that’s current gone fully paid and is physical I. The showroom . And the salesman’s job is to persuade you that this is the best option.
Manufacturers request allocation of all models from the factory and sometimes are asked to request more, and some times told to take more like at Nissan where the Russian made right hand drive Xtrail were destined for another market but ended up in the Uk with a couple of software tweaks.
But anyway the real money is in used cars.
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