Dealer Insights - March/April 2012 - Building the Perfect Inventory
Keep it lean, but on the money
Having the right inventory of vehicles in stock is a bit of an art and more of a science. Make good choices, and you’ll meet your customers’ needs and boost sales. But make some bad choices, and you’ll have units collecting dust on your lot and customers clamoring for models you don’t have.
The bottom line is: Your dealership can’t afford to guesstimate the mix of cars and trucks it should keep in stock. Consider the following strategies as you strive to keep — and replenish — the perfect inventory.
Inspecting the marketplace
The market for cars and trucks varies by geographic area, based on socioeconomic conditions and other external factors. Find out what’s selling in your “neighborhood” by reviewing information that’s been collected by your state’s department of motor vehicles (DMV).
Some vendors specialize in compiling this information from state DMVs and then selling it to dealerships in digestible formats. If you’re not already obtaining this type of information, you should consider doing so.
What dealership doesn’t want to know what its competitors are selling and consumers are buying each month? This can be a gold mine of information to help you better understand your market, uncover opportunities to grab market share and make informed stocking decisions.
Finding the right tools
The Cross-Sell Report, offered by Dominion Dealer Solutions, is a monthly vehicle sales and registration report that’s custom-made for each client’s particular market. The report details sales by make, model, owner city, owner ZIP code, seller name and other categories. Customers can set up their reporting area by city, ZIP or county and track specific makes and models.
The Report’s “New Vehicle Market Analysis” might show, for example, that while you sold 14 Model X’s last month, Competitor A sold 66 and Competitor B sold 43 — information that might sway you to stock more Model X’s next month.
And the “Used Vehicle Market Analysis” might reveal that, of the 268 used cars sold in your market last month, 143 were imports, and the top five best sellers were Toyota (28), Honda and Nissan (both 13), Hyundai (11) and Mercedes-Benz (10). As you negotiate trade-in prices with customers, you’ll have a fact-based idea of the demand in your market for these makes.
Looking for quick sellers
After you have data on what’s hot in your area, look within your own dealership and analyze, in detail, which units are selling best. Many stores keep up-to-date spreadsheets on the vehicles they sell each month, showing the turnaround time for each sale and the average “turn time” for each model.
It’s also helpful to track the turn time for models with specific features and accessories. You might find out, for example, that it takes your store an average of 30 days to sell a fully loaded Model X. But it takes an average of only two days to sell a stripped down version of the same model. Use this information wisely — it can be your reality check.
Exploring other resources
Other resources are on the market to help dealerships keep track of their inventory and make the right stocking decisions, including:
- A new smartphone-centric inventory management system produced by RedBumper, and
- vAuto’s Provision, a used-vehicle inventory management engine.
Be sure to explore all the resources that might provide you with useful data.
When it comes to inventory, the lesson is: Do your homework on what sells in your area. Then, using reliable data and your own judgment, stock cars and trucks accordingly. Always buy what you have the best chance of selling quickly. Know your market.
Dealer Insights - March/April 2012 - Dealer Digest