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Discussion Starter #1
Hi all.

Can anyone tell me if the individual Ford dealers actually own their stock of 'Stangs or does Ford own them and the dealers just sell them as quickly as they can?

I had been under the impression that the dealers bought the cars (took out a loan to purchase all of their inventory, maybe with the exception of customer orders). And then they were under pressure to move 'em out ASAP due to having to pay interest on the loan. Perhaps it's vice-versa: they own the customer orders but Ford owns the dealer-ordered Mustangs.

The motivation for dealers to rapidly turn over their stock is what I am trying to grasp. Holdback, floorplan interest, quota bonuses etc. are obviously factors in the equation.

I want to know who's head is in the financial guillotine for the cost of the Mustangs on the lot. From what I can remember I have heard conflicting information.:im confused:

Thanks in advance!
 

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the dealers (financed through there banks) own the cars...
 

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A couple of the dealers around here conduct their business like the cars are worth more and keep increasing in value the longer they keep them.

If you get that feeling from any of the ones you talk to you'll know you've found the place not to buy your car. :winks
 

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As 2slow said, they take loans out to purchase cars. I would think it's a revolving line of credit. As they sell cars, they pay down their debt and reduce their interest expenses. In the book about the GM and Chrysler bailouts, it was explained that GMAC, Chrysler Financial, and I would assume Ford Credit as well, finance a lot of the dealers' inventory. But don't assume that yes the car companies own the cars. The finance arms are their own independent companies. But it would be up to each individual dealer to decide how they finance their inventory. They all don't go through the auto finance companies.
 

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Yes, the dealers own the vehicles. And no dealer wants aged inventory. As vehicles get older, they become a liability for the dealer.
 

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Discussion Starter #6
As 2slow said, they take loans out to purchase cars. I would think it's a revolving line of credit. As they sell cars, they pay down their debt and reduce their interest expenses. In the book about the GM and Chrysler bailouts, it was explained that GMAC, Chrysler Financial, and I would assume Ford Credit as well, finance a lot of the dealers' inventory. But don't assume that yes the car companies own the cars. The finance arms are their own independent companies. But it would be up to each individual dealer to decide how they finance their inventory. They all don't go through the auto finance companies.
Excellent points. You mentioned some things that I didn't think of. It would seem then that the financier of the loan is the true owner of the vehicle but the dealer is still responsible for it (and making timely payments on it). And the holder of the loan can be either a bank completely unrelated to the manufacturer or their finance arm (in this case, Ford Motor Credit).

Essentially, it's a very similar arrangement to when a consumer purchases a car and finances it over so many months time.

Much appreciated! :)
 

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Has anybody else noticed how packed some GM lots are lately? I wonder if GM is trying to boost sales numbers by pushing a lot of cars out to their dealers? I guess it depends on how they do their books. If so, maybe that's how the Camaro is beating the Mustang in sales?
 

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Yes, the dealers own the vehicles. And no dealer wants aged inventory. As vehicles get older, they become a liability for the dealer.
That makes sense. Beyond the interest that they have to pay on each individual vehicle, a crowded lot of older cars may even affect the dealer's ability to get a low interest rate on the loans that they need to buy more new cars. Maybe it affects their line of credit in some other ways too. Or their ability to order new cars from Ford in the future.

I'll have to poke around and see if there's a way to determine how long a dealer has had a car in their possession. Cars.com allows you to filter your search results by the number of days that the vehicle has been listed on their site. But the dealer may not have posted the vehicle right away either.

Thanks!
 
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