10 cars Americans don't want to buy

Thomas C. Frohlich | 24/7 Wall St.

Show Caption Hide Caption Cars Americans don’t want to buy Douglas McIntyre of 24/7 Wall St. talks about cars that dealers can’t get off their lots

The American auto industry was pummeled during the recession. Since then, car sales have recovered gradually. More than 1.5 million cars and light trucks were sold in March, up slightly from a year ago.

While people are buying cars again, the demand for certain vehicles each year is remarkably low. According to data provided by Kelley Blue Book, a vehicle sold in the United States last year spent about 71 days on average on a dealer's lot before it was sold. Some car models took less than 15 days to sell on average, while vehicles at the other end of the spectrum took an average of more than four months to sell.

In an interview with 24/7 Wall St., Kelley Blue Book analyst Tim Fleming said that a long turnover time is often symptomatic of floundering sales, and that many of these vehicles will be discontinued if they are not already. Indeed, a number of the models with the longest turnover periods in 2013 and 2012 have been discontinued since.

An especially high number of days to turn generally means the carmaker produced too many cars. High turnover time does not necessarily indicate that a car is absolutely popular or unpopular, but rather that it was popular or unpopular relative to the manufacturer's expectations. For example, more than 43,000 Buick Veranos were sold last year, but it took nearly 145 days to turn the car. As Fleming explained, this implies that Buick expected even stronger demand and built more Veranos than people actually wanted to buy.

While spending especially long periods of time on dealers' lots is generally a bad sign — not just for the model but also for the carmaker — this is not always the case. For example, a Nissan GT-R spent about 170 days on the lot before it was sold last year, second only to the Honda Insight. However, the GT-R is in the very exclusive supercar category, and its unit sales of just 1,500 in 2014 was small compared to Nissan's overall unit sales. This means a poor turnover time for the GT-R will not impact Nissan's profitability. Also, the manufacturer's suggested retail price (MSRP) of roughly $100,000 for the GT-R is prohibitively expensive for most Americans.

There may be more at stake for Cadillac, on the other hand, which produced three cars with the longest turnover times. General Motors (GM) still dominates the U.S. auto market, although its share of all sales declined from March of last year to this March.

"These vehicles all launched recently as sort of a resurgence for Cadillac," Fleming said. However, "the inventory was not managed properly."

As older vehicles typically take longer to sell than new ones, this may be an especially bad sign for Cadillac. "When there's a newer product that isn't selling, that's never a good sign," said Fleming.

It should be noted that overproduction of a vehicle is not always the result of overestimating its consumer appeal. For example, the recent decline in gas prices is having a material impact on the attractiveness of hybrid and electric gas, as driving gas-powered cars has become more affordable.

To identify the cars no one wants to buy, 24/7 Wall St. reviewed the highest average number of days car models spent on dealers' lots before they were sold in 2014 from Kelley Blue Book (KBB). KBB also provided average turnover times from previous years in addition to unit sales figures by make. The manufacturers' suggested retail price (MSRP) data are from their websites and refer to the newest model year. We also relied on car reviews from J.D. Power and Consumer Reports. Additional sales figures are from The Wall Street Journal.

These are the cars no one wants to buy.

10. Cadillac ATS

> Days in inventory: 138.1

> 2014 unit sales: 29,890

> MSRP: $33,215

A Cadillac ATS spent an average of about 138 days on dealers' lots before it was sold, the 10th longest time of all other car models last year. Cadillac sold nearly 30,000 units of the luxury sedan in 2014, nearly 20% of all Cadillac's annual unit sales. Because ATS represents a large portion of the maker's business and floundering sales, GM laid off workers at its ATS factory in Lansing, Michigan. The ATS is one of three Cadillac models with the longest days to turn. The carmaker released the ATS in 2012 to compete with small luxury brands such as the BMW 3 series.

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9. Kia Cadenza

> Days in inventory: 138.8

> 2014 unit sales: 9,267

> MSRP: $35,100

The Cadenza was reviewed favorably among large sedans by Consumer Reports magazine in 2013. Despite the favorable review, a Cadenza, like other slow-selling car models, spent well more than four months on dealers' lots before it was sold. The Cadenza is not especially popular among Americans, but neither are most large sedans. As consumer preferences have shifted towards mid-sized and entry level luxury brands, large vehicle segments are doing considerably worse this decade than they did in the previous one, according to KBB's Fleming. Cadenza sales made up less than 2% of Kia's overall unit sales last year. Despite poor turnover rates for the Cadenza, overall Kia sales grew by more than 7% over that period, even while sales of many automakers declined from the first half of 2013 through the first half of 2014

8. Volvo XC90

> Days in inventory: 139.5

> 2014 unit sales: 3,952

> MSRP: $48,900

The XC90 is Volvo's take on the mid-sized luxury SUV. While the car is generally well reviewed and affordably priced relative to its competitors, it did not move in 2014. Volvo sold just 3,952 such units in the United States, with the average car sitting on the lot for almost 140 days. Volvo updated the first generation of this car last year, with the next generation model being introduced this year. It is likely that the slow sales are attributable in part to customers waiting for the next generation.

7. FIAT 500L

> Days in inventory: 140.1

> 2014 unit sales: 12,413

> MSRP: $19,195

Fiat Chrysler (NASDAQ: FCAU) sold 12,413 500L models in 2014, a sizable 30% of its total unit sales that year. The 500L was not especially popular, spending an average of nearly five months on the lot before it was sold. The Fiat 500L is one of the best-selling cars in Europe, but it has not caught on nearly as well in the U.S. market. Fiat's unit sales increased 15.5% from the middle of 2013 through the middle of last year, one of the larger growth rates reviewed. While the 500L is relatively inexpensive with an MSRP of less than $20,000, quality concerns may partly explain the car's especially long days to turn. In J.D. Power's Vehicle Dependability Study, more than 200 problems or complaints were reported per 100 Fiat vehicles, the highest number compared with other carmakers reviewed. In addition, the 500L is larger than a compact car but not quite a utility vehicle. Fleming observed the position of the model between traditional segments may also have hurt its chances at the dealership.

6. Cadillac XTS

> Days in inventory: 144.6

> 2014 unit sales: 24,335

> MSRP: $44,660

Cadillac's CT6 was unveiled at this year's New York Auto Show. The large sedan is meant to eventually replace the XTS, which is now scheduled to be discontinued in 2019. Because the two cars are similar, consumers who would have purchased an XTS last year may have opted to wait for the arrival of the CT6. While Cadillac sold 24,335 XTS models last year — a significant portion of its total U.S. unit sales — the model spent nearly five months on the lot before it was sold. Cadillac's parent GM still dominates the U.S. auto market with a 16.2% market share as of March. However, with floundering Cadillac sales and slow-selling models are weighing on the manufacturer's ability to maintain its leading position.

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5. Buick Verano

> Days in inventory: 144.7

> 2014 unit sales: 43,743

> MSRP: $23,380

Introduced in 2012, the Buick Verano's design is based on the less expensive Chevy Cruz. Like several cars spending the most time on dealers' lots, the Verano is a more expensive entry-level compact luxury sedan. While slow-selling models tend to have relatively low unit sales, Buick sold 43,743 Veranos in 2014, more than any other slow-selling model. According to Fleming, Verano's high number of days to turn may be acceptable for Buick, as the automaker posted substantial profits from Verano sales. Like Cadillac, the Buick brand is operated by GM, which dominates the U.S. auto market. But while Cadillac's U.S. market share decreased slightly last year, Buick's increased.

4. Infiniti Q60

> Days in inventory: 158.3

> 2014 unit sales: 7,740

> MSRP: $40,950

The Q60 is Infiniti's mid-sized luxury coupe. It competes in a tough space, with stiff competition from BMW, Mercedes, and Lexus. Infiniti appears to have overestimated its ability to compete in the space. In 2014, Q60s spent an average of 158.3 days on dealers' lots before being sold. This implies that despite decent sales numbers of 7,740, Infiniti made more of these cars than the American people were interested in buying. This is not that surprising given that the car is priced similar to more highly rated comparable cars.

3. Cadillac ELR

> Days in inventory: 158.6

> 2014 unit sales: 1,310

> MSRP: $75,000

The ELR is Cadillac's first foray into the electric car space. These cars spent an average of 158.6 days on the lot prior to being sold. The main problem of the ELR is its competition — the comparably priced Tesla model S, which apart from being far better reviewed than the ELR is also far more recognizable by most Americans in the electric car market. Beyond issues of tough competition, sales of Cadillac's electric car likely also suffered from the large decline in gas prices in 2014. The good news is that Cadillac did not bet the farm on this car. The 3,952 ELR units sold in 2014 represented less than 1% of total Cadillac unit sales.

2. Nissan GT-R

> Days in inventory: 169.9

> 2014 unit sales: 1,436

> MSRP: $101,770

According to Nissan, the GT-R is the fastest car produced in high volume worldwide. Less than 1,500 of these supercars were sold in 2014, and it took nearly six months to sell a GT-R, longer than all cars but the Honda Insight. The slow selling GT-R model is not likely a major concern for Nissan, however, as the car is intentionally exclusive as the pinnacle of the manufacturer's portfolio. The price point of the GT-R of around $100,000 is exceptionally high even among luxury vehicles. In March, Nissan North America's car business had a 5.4% U.S. market share, down from the same time in 2014, when the company had a U.S. market share of 6.2%.

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1. Honda Insight

> Days in inventory: 170.7

> 2014 unit sales: 3,965

> MSRP: $18,725

No car model spent more time on the lot than the Honda Insight, which in 2014 took about 171 days to sell on average. By contrast, the industry-wide average is about 71 days to turn. In addition, less than 4,000 Insights were sold in 2014. Like several other slow-selling vehicles, the Insight is marketed as a fuel-efficient car. With gas prices falling dramatically across the nation last year, however, electric cars and hybrids such as the Insight have become less popular. Honda announced it would discontinue the car due to slow sales. The poor performance is by no means a boon for Honda (NYSE: HMC). Despite poor performance, Insight sales accounted for a relatively small portion of the makers overall unit sales — less than 1% — which means the Insight's failure to attract consumer interest won't be especially damaging to the company's overall profitability.

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