How New Hyundai Vehicles Get to Our Dealership

Besides your house, vehicles are some of the largest purchases you'll ever make in your lifetime. For the vast majority of people in the U.S., owning a car is just another part of life. Car shoppers will spend an average of three hours at the dealership looking for a vehicle that meets their needs and desires. But while car buyers are looking for a new ride that fits their budget, they rarely consider the business side of a car dealership. If you're looking to purchase a new car soon, you may want to consider where and how most new Hyundai vehicles actually get to the dealership in the first place.


Where do most new vehicles on a car lot come from?

Every car you see on a lot is there for a reason, and the decision to display the vehicles isn't something taken lightly. If you see a car on a lot, it's only because the dealer wants that specific model there. Only cars that have a reasonable chance of selling for a reasonable price will make it onto a car lot at the dealership. So, how do car dealers decide on the right inventory to order? They take into account their current interpretation of the vehicle market, how well they've been able to sell specific vehicle models before, and the type of feedback they've gotten from customers. Car dealers also have to consider what the OEM or Original Equipment Manufacturer wants them to order and stock.

For car models that are hot and in-demand, it can be difficult for dealerships to get the correct amount of inventory in some cases. Certain models will sometimes become huge successes that no one could have foreseen. In this instance, manufacturers sometimes don't have enough of the cars to ship to dealers. Models that suddenly fall out of favor can also harm the dealership's bottom line. This happened with Volkswagen's emissions scandal in 2015.


What about used cars at a dealership?

When it comes to stocking used vehicles, dealerships often look at how many new cars they are selling to determine the ratio of used cars they should keep in stock. If a dealership's business is booming, that means they will end up with a large amount of traded-in, used vehicles. Roughly one-third of all used cars in a dealership's inventory is from trade-ins.

Also, if a particular model of used Hyundai is in high-demand, the dealer will obtain those cars from used-car auctions, which accounts for about another third of any given dealership's used car inventory. Some dealerships will even engage in what's called "street purchasing," where they buy cars straight from the public, even if the person selling the car is not going to buy a new vehicle from the dealership. Dealerships will also buy cars from new car dealerships and re-sell them as used cars or light trucks.

How does a dealership pay for new cars on the lot?

Just like everyday car buyers, dealerships often use financing to purchase new cars straight from the manufacturer. They do this via a mechanism called "floorplan pricing." In most instances, new cars that you see on a dealership's lot are financed through the manufacturer. Like average consumer Jane and Joe, dealers will also pay monthly interest on the loan when buying new cars. In a lot of cases, used cars are also financed in this way, though many are purchased outright. For new cars, though, the dealer must pay off the initial equipment manufacturer, then finance the vehicles with the OEM's financing wing.


How are new cars transported to the dealership?

Buying the car is one thing, but then the dealership has to transport the new inventory to their lot. There is an entirely separate and lucrative industry related to inventory transportation for dealerships. Hyundai, for example, operates the world's biggest automobile manufacturing plant in South Korea. The facility produces up to 1.6 million units per year, selling these vehicles in 193 countries and more than 5,000 dealerships and showrooms. The organizational demands of such an operation are enormous. All of those cars and trucks must be delivered to several thousand dealerships.

Hyundai also operates several other manufacturing facilities in the U.S. and other countries besides South Korea. Deliveries from the Hyundai manufacturing facilities weigh several tons. These deliveries aren't like your run-of-the-mill consumer goods' shipments, like dropping off an order of bar soap at the local supermarket. Dealers order precise models and numbers of these cars from the Hyundai production plants. Accurate delivery of vehicles has to be correctly routed through many different transportation channels, so the new cars get to the dealership on time, and free of damage.

What about used cars? Those are also transported similarly to new cars, being carried on heavy-duty transportation vehicles throughout the U.S. Over 42 million used cars are sold in the U.S every year, with a third sold through franchise dealers like Tony Hyundai. A used car can sometimes take several trips on an auto hauler when they're being shipped to an auction or wholesale operation before they finally end up on the dealership lot.

New Hyundais are also transported via airplanes, ships, and rail. A vessel designed to carry vehicle cargo can transport up to 8,000 vehicles at a time, but most transport around 4,000 to 5,000. Foreign-built cars, such as new Hyundais from the large manufacturing facility in South Korea, get to the U.S. via ocean vessels. An estimated 65 to 70% of all new cars sold in the U.S. travel via rail and also auto transport trailers, before their final arrival at the dealership.

Knowing how dealerships operate and how new Hyundais get to our lot makes you a more informed consumer. When you're ready to purchase a new car, you'll have a better grasp of what a "good deal" looks like so you can get the best price possible.

Article by Jason Mueller

Courtesy of Boydstun Equipment Manufacturing - Car Haulers, Vehicles Trailers