In today’s market, stocking your dealership’s lot with the right inventory is crucial and has a direct impact on overall dealership profits and success of the business. It involves knowing which vehicle makes and models are in demand based on the location of your dealership, as well as analyzing what the right amount of desired stock looks like based on a specific month or season. It’s all about ensuring dealers have the right stock and that the inventory management tools in place match dealers’ unique inventory needs. Â
Stocking the Right Vehicles
With so many different body styles, colors, and trims available, deciding which vehicles to stock at your dealership can be challenging and monopolize time—and time is money! How do dealerships best determine which cars to have on their lot?Â
Dealers might stock the models customers are showing interest in, but they could lose that sale if a competing dealership across town has the same model with the color and engine options consumers are looking for. On the other hand, vehicles not in demand will end up sitting on dealership lots for far too long, dragging down overall sales efficiency. Dealers can use their best judgment and professional expertise when selecting their vehicle stock, but with customer preferences constantly changing, how can dealerships ensure that the inventory decisions they make are informed and meet the needs of their consumer?
This is where inventory management platforms come into play – dealerships can leverage these platforms to identify the cars that are in demand in their market at any given moment. These tools can even analyze data from your market down to the zip code to tell you exactly how specific cars will perform in that area. You can also examine your historical sales data within the platform to learn which models have proven successful in selling. The result? Dealers can ensure their lots are filled with vehicles that match their specific consumer, increasing vehicle turnover and overall dealership profitability.Â
Tracking Key Metrics
Does your dealership know exactly how long the average vehicle stays on the lot before selling? Does your dealership know what the mean cost to market is or the median reconditioning time? These are critical metrics when it comes to inventory management that many dealerships struggle to accurately track and directly impact overall sales numbers.Â
Dealers need to monitor key metrics like these to understand how their dealership is performing and identify areas for improvement. Without accurate data, dealerships won’t have a clear picture of their inventory management. By employing a digital inventory management system that automatically tracks these key metrics, dealers can streamline operations and save time, which in turn will help dealers save money.Â
Dealers can view metrics and delve deeper into their results from a dashboard that automatically updates with real-time data. Dealers won’t have to worry about manually tracking and calculating these metrics again. If any changes are made to your inventory needs, dealers will know right away by checking the dashboard in the system.
Avoiding Low Inventory Turnover
Low inventory turnover is a common problem in the automotive industry that restricts overall sales potential. Oftentimes, when dealerships experience low inventory turnover, they are either stocking too many vehicles or facing other problems with their inventory management procedures. This presents an opportunity to dive deeper into the procedures in place and identify areas for improvement. From there, dealers can adjust their acquisition strategy to address low inventory turnover and focus on finding the right vehicles for their customers.Â
Utilizing inventory management software can help. Dealers can discover which cars are most in-demand at any specific moment for their particular location. The platform will also assist dealers in appraising those vehicles and setting prices, giving them the best odds of turning over inventory quickly.
Properly Executing a Pricing Strategy
Finding and executing the right pricing strategy is challenging for most dealerships. If a vehicle is not competitively priced, dealers are at risk of losing customers and as a result, losing potential sales. If a vehicle is priced too high, customers will visit a competing dealership. On the flip side, if a car is priced too low, dealers are missing out on potential revenue and harming overall profitability. This is where data transparency can be used to dealerships’ advantage.
It is important to implement inventory management systems that use real-time market and wholesale data from a comprehensive data set to determine exactly how much you should charge for a given vehicle. With solutions like ACV MAX, dealers can find the pricing sweet spot that leaves both the customer and dealer pleased with the result.
Real-time data is critical – it isn’t just about offering the right car at the right price, and as dealers know, timing is everything. Dealerships have to be sensitive to how long a vehicle is on their lot and know exactly when it may be best to wholesale a trade-in rather than leaving it on the lot where it is not only taking up space but also costing the dealership money.
By employing an inventory management tool and strategy, dealerships can take control of their inventory management, analyze what is on their lot to guide acquisition strategies, and develop more effective merchandising strategies to drive better results.
