Stocking only what sells in your dealership and using actual sales history to determine your fastest-moving
and highest-grossing units may seem obvious, but in my 20 Group travels I have seen many dealers running their
used-car businesses on nothing more than gut instincts and the personal preferences of a used-car manager.
These dealers share the same problems: 30 to 50 percent of their inventory is over 60 days, they have huge
wholesale losses, and their used-car business isn’t growing to expectations. Ironically, dealer parts departments have used sales histories to determine stocking levels for years, and do a great job of managing parts inventories. All the big national retailers—from supermarkets to furniture stores—use sales history data to inventory their stores. Big retailers even use the information to determine where to place a product in the store. These practices are bulletproof; they don’t rely on emotion, gut feelings, or personal preferences—just hard sales data focused on best-selling products.
Applying proven practices
Sales history: Start with your last 90 days’ sales history,. Identify the fastest-moving units—
those that sell in 1 to 30 days, then those that move in 31 to 45 days. Chart the data—year, make, model, selling price, gross, days in stock, source, mileage, trim levels, and color. Look at your wholesales for patterns. Then go back another three months, so you have a six-month window on your sales history. This should give you a good idea of what’s selling best in your store. Useful software programs: Vendors like First Look, and AAXchange offer software programs that can extract your sales history from your DMS and feed you all kinds of great information so you can make data-based decisions. VAuto compares your cars to every other similiar car for sale on the internet. VAuto also gives you the best selling vehicles in your market.Armed with the data, you can create an ideal inventory and start electronically searching the auctions and Internet for hot models. You can also be more aggressive on those units whenthey come in for trade appraisals.
Know your market: To grow your business, the next step has to be getting the used-car sales data for your market area. This information is available through R.L. Polk, NADA guides, Experian, and others. These reports can give you a tremendous amount of information about used cars sold in your area. They can rank the best-selling used cars in your market by year, make, model, and ZIP code. Only take risks on cars that have a good sales record in your target market.
The bottom line: Make data-based decisions on your usedcar inventory. Implementing this one change will take your
used-car business to a higher level.
Steven Risso is an NADA 20 Group dealership management consultant who
joined the group last year, bringing with him 24 years of dealership experience.
He can be reached at email@example.com.