The cost of obsolescent parts for a car dealer

According to the NADA, an average-sized dealership is sitting on $50,000 worth of parts that haven’t moved in a year. Think of what could actually be done with that $50,000. If you were running things properly, that small investment could easily generate $400,000 in sales during a year. To help you get better control of your inventory, we’ve put together a few suggestions when you are ready to move those obsolescent parts out of the dealership.

We start by looking at the policies and habits that cause this problem. Then, we move onto what you can do to resolve the situation now.

Set Stricter Return Policies

We understand the need to keep your good customers happy. With your wholesale customer, it’s wise to have a more flexible return policy. However, this reward should be earned. The average Joe who buys a part once every five years should not get this preferential treatment.

Special Order Payments

When you order something online, you need to pay for it upfront. You don’t get to put the part in your hand before you hand off the dough. The same should be true when a customer orders a special part from you. They need to pay in advance for any special part that you aren’t going to sell.

Hire a Specialist

Instead of letting $50,000 sit on your shelf each year, consider hiring someone to head up the inventory. Even if you paid the same amount in salary, you could create revenue that boosts your bottom line. The tricky part is finding a parts manager that cares about the inventory the same way you do. To make it more competitive, offer bonuses when the obsolescence parts reach the level you are looking for.

Return Parts to the Manufacturer

Some manufacturers will take back your obsolete auto parts after a certain period. Typically, there is a set time when you can gather your obsolescent parts and fill out a form to return them all to the automaker. Check with your parts district manager to find out if your manufacturer offers this type of program and how to capitalize on it most effectively. Keep in mind, this solution isn’t going to put more money back into the dealership, but it does solve your inventory problem.

Sell Your Parts

With how vast the internet is, there’s no reason to sit on those parts any longer. Someone is looking for what you have, and you can make some money in the process. You could put forth the effort to sell on eBay or Amazon, but that can be time-consuming and frustrating if you do it alone.

Instead, you might consider an eCommerce provider, such as Revolution Parts. This eCommerce solution provides your online parts and accessories catalog, the shipping tools and order processing you need to get the parts business up and running. Find a parts eCommerce solution provider that aligns with your goals.

Trade Your Parts

If you don’t want to get into the business of selling your auto parts, consider trading them with other dealers instead. Sites like NADPE allow you to exchange idle parts with other dealerships at the full dealer cost. You won’t lose any money on these trade deals.

Take Control of the Parts Department

There’s truly no reason to write off any more losses due to obsolete parts inventory. With the solutions available to you, it’s easy to turn these parts into profit. Get rid of what you have and change the policies that create this mess in the first place.

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