Bump Up Your Bottom Line with an Aged Inventory Action Plan

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Using AutoTrader’s Trade-in Marketplace Solutions

Aged inven­tory is an age-old prob­lem but it’s no joke – tying up cash and hurt­ing prof­itabil­ity because you’re sit­ting on a depre­ci­at­ing asset. Yet, this is an entirely man­age­able sit­u­a­tion, and with today’s tools and tech­nol­ogy, aged inven­tory should be a mere blip on your bal­ance sheet.

One of the most crit­i­cal com­po­nents of a sound process is an exit strat­egy that min­i­mizes losses.

Tips for Mov­ing Aged Inventory:

Ana­lyze your inven­tory. The first thing you should do is take stock of where, how and what you paid for every used car on your lot and per­cent­age of units by days in stock. In all like­li­hood, this inven­tory analy­sis will reveal your buy­ing pat­tern. It will also lay the ground­work for retool­ing your approach to acquir­ing future inventory.

Orga­nize your inven­tory by its aged sta­tus. While accepted indus­try prac­tice is 60 days, you’re freez­ing cap­i­tal. Thus, your process should include tac­tics that address cars at 15-, 30– and 45 days and beyond, which should include weekly mon­i­tor­ing of your aging inven­tory on the Search Results Page (SRP) and Vehi­cle Details Page (VDP) on your web­site as well as third-party sites.

Start mov­ing your vehicles.

  1. Get your cars front-line ready as soon as pos­si­ble. Use a tool such as vAuto to see how long it will take you to get the vehi­cle to your web­site and third-party sites, fully mer­chan­dised from the time you pur­chased it. Com­ing out of the gate quickly helps drive down days in inven­tory as well as turn rate for your store.
  2. For cars at 30, detail a selec­tion of your aged vehi­cles and move them to another loca­tion on your lot. Reeval­u­ate your pric­ing. If you’re in a group, call other deal­ers to see if they will take any of your cars.
  3. At 45 days:
    • Detail the cars again and move them to the front line of your lot
    • Go online to see what they are retail­ing for and check out their whole­sale price; adjust prices down accordingly

At 60 days, turn a neg­a­tive into a pos­i­tive. Accord­ing to the NADA, the cost of keep­ing a used car in inven­tory is $28/day. Although this varies by mar­ket, you’ve likely sunk well over $1,600 per unit for every car that’s been on your lot for 60 days, so it’s time to cut your losses. Your options:

  •  Whole­sale every car that’s over 60
  •  Go to AutoTrader.com’s Trade-In Mar­ket­place (TIM) for offers
  •  Call your auc­tion house

Use AutoTrader.com’s TIM tool to get offers/bids for a car. Reeval­u­ate whether you want to keep the car or dis­pose it through TIM. More tips and help for deal­ers can be found by click­ing on the full arti­cle here.

 

 

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