Inventory Management Tips For Used Cars

1. What Used Cars Are Moving?

Knowing what inventory you move the quickest helps you know what to focus on when acquiring vehicles. Take a look at the vehicles you were able to retail within the first 60 days and look for these things:

• The average cost of sale.
• The average model year.
• The average mileage.
• Is the brand one that you typically can retail?

Taking the time to analyze this data on a routine basis will help you identify a pattern and begin to play to your strengths and approach slower moving vehicles with more caution. Many inventory management tools will show this information rather quickly. Reviewing this information routinely helps keep it top of mind to ensure you have all the information when making your decisions.

2. Review Yesterday’s Trade-Ins Daily

Oftentimes vehicles are appraised in the heat of the moment with several deals working at once. Pressing pause to review the previous days appraisals can you an effective way to catch a mistake before it becomes a much bigger problem down the road.

If you would like a second opinion, there are several third-party companies that will give you a buy bid on-line. Leveraging their service, can give you a great back stop to help you move forward with confidence.

3. Recondition Used Vehicles Properly

Customers shop for pre-owned vehicles at a dealership so that they can buy in confidence. Knowing that they dealer inspected the vehicle and will back it up are major selling points to the customer.

Nothing will erode a customer’s confidence more than looking at a vehicle that has not been properly reconditioned both mechanically and cosmetically. Spend the extra money and make sure that your salespeople are not having to apologize for a vehicle on your lot. Apologies make it tough for salespeople to build value and keep the customer interested. Plus, you don’t want to risk negative online reviews.

Drive the vehicle yourself after it leaves the service department to make sure it passes your standard.  The term “inspect what you expect” has never been more applicable than in the used car reconditioning process.

4. Promote Pre-Owned Vehicles Online

Many dealers are great at making their cars and their lots look appealing. However, most customers will be looking at your inventory online well before they get to the lot.  Go to your website and look for things like:

• Does each vehicle have multiple pictures?
• Do recent trades have at least a photo or two?
• Are the pictures current (no snow on the car if its July)?
• Is the mileage correct for vehicles that have been driven?
• Are managers specials up to date?

With today’s automation, it is easy to assume that everything is uploads to your website smoothly and correctly. Don’t get caught in that trap. Your website is often your first impression to the customer, and it is important to put your best foot forward.

5. Understand Your Pricing Strategy

In my travels to different dealerships, I have discovered that each dealers feels different when it comes to their pricing strategy. Some will ask more for a fresh unit and less for the older ones.  Other dealers start the price right on the market.  And then some are in between. While a nice car is always going to be a nice car, it is a competitive environment, and the consumer can easily compare multiple lots at once.

Regardless of your pricing strategy, please make sure your website builds value and that you have a way to retarget and remarket to those who have visited. Nothing good happens until you sell a car, so remember that smaller margins can grow large when a relationship forms with the customer. Trade-ins, accessories, F&I products, service department retention all help grow the bottom line.

6. Stand By Your Turn Rate Policy

Similar to a pricing strategy, a turn rate policy can be unique for each dealer. We all know that the higher velocity you can turn your inventory, the better off you are.  But sometimes it’s tough to say good-bye.  The biggest mistake I see is a dealer having no policy at all. Or they have a policy but are constantly making exceptions to it.

Having a policy and sticking to it provides a framework of expectations for your staff. Dealership personnel will rise to the standard you set if they know they have no other option. Establish a rainy-day fund for the real-world problems that happen but hold your people accountable to getting the vehicle off the lot and sold quickly.