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By David Meyer, Executive VP
Some things get better with age. Fine wines, gourmet cheeses, even — some might argue — people. But when it comes to your vehicle inventory, aging does not increase its value. In fact, the older your vehicle inventory, the more it’s costing you in out-of-pocket profits.
According to NADA, it costs around $28 per day to keep a used car in inventory. For every vehicle that’s been on your lot for 60 days, you’re paying about $1,600. Now that’s a loss you want to avoid. So how do you go about moving those aging cars that are cutting into your profits? Here are a few simple tips to help you get those cars off your lot, so you can bring more money in.
Evaluate your inventory. Take note of where you got each vehicle, what you paid for it, and how long it’s been on your lot. Get a percentage of how many vehicles you’ve had for 15 days or less, for more than 30 days, for more than 45 days, and how many have passed the 60-day mark so that you can prioritize your sales efforts. Be sure to keep these numbers up-to-date.
Knowing the state of your inventory will also let you see which types of vehicles are selling and which aren’t, so you can make better inventory choices in the future. Ideally, you want to sell every vehicle before it hits 30 days on the lot, so avoid those vehicles that historically didn’t sell.
Give aging vehicles a make-over. When a vehicle hits 30 days, and again at 45 days, and again at 55 days, detail the vehicles so that they’ll look their best. Keep your aging inventory in tip-top shape so they don’t show their age.
Rotate your inventory. Switch up the vehicles you’re promoting, giving those aging vehicles a chance to be on the roadside or in the salesroom so they’re not overlooked.
Incentivize your sales people. Chances are, your sale team isn’t in too much of a hurry to sell these aging cars since they’re making less off those sales. So spiff it up. Offer them a bonus for selling those really long-in-the-tooth cars, or even a cash credit that reflects the number of days the car was in your inventory.
Adjust your pricing. When a vehicle hits 45 days without selling, it’s time to re-evaluate the selling price to make it more attractive. And remember, most of you credit-challenged customers buy vehicles for the monthly payments not the sticker price, so sell that instead.
Start thinking about auction. When a vehicle hits 60 days in your inventory, that’s a sign it’s probably not going to sell. At this point, consider wholesaling it to another dealer or taking it to auction to cut your losses.
Adopt a GPS vehicle tracking system. Using a system like GoldStar GPS to track vehicles allows you to lower the risk associated with financing credit-challenged customers. You’ll be able to confirm STIPs, reduce delinquencies and defaults, keep customers on track with their payments, and repossess delinquent vehicles more quickly and cost-effectively if need be. The added security, confidence and cost-savings allow you to offer more attractive terms and pricing that will make it easier to turn vehicles more quickly.
To learn how GoldStar GPS can help you move your inventory, visit GoldStarGPS.com.