Wine and Cheese Should Age. Vehicle Inventory Should Not.
There are really only two ways to handle aging inventory:
- Mark the car down on a rolling basis (15 days, 30 days, 45 days, 60 days) and then wholesale it.
- Run it through the local auction.
Either way, the dealership loses money.
One exception to this would be larger dealer groups. These groups might have the ability to swap aging pre-owned vehicles from their inventory to a sister store, and in return take their aging vehicles. It might look better on paper, but it’s just moving the problem cars around and not retailing them.
A way to gauge the strength of pre-owned inventory is to run what is sometimes called a “water report”. The water report will show how much was overspent on current pre-owned inventory, or the gap between how much money was invested in inventory and what the true value of the inventory is.
For example, a dealer has $2 million in pre-owned inventory on the books, but the true value of the cars is $1,960,000. This dealer has $40k in water. This could be the result of over paying for the car initially, or marking it down several times.
Our newest addition to the Naked Lime portfolio, XtreamService, helps dealers sell pre-owned cars for a profit before they are marked down and/or wholesaled at a loss.
There are many systems that show inventory age and how much prices should be reduced to be competitive in the market. Dealers can also run their own water report. But XtreamService allows dealers to match their inventory with their existing customer data, generating new leads from their own current customer base.
Your best leads are right in front of you. If you need help finding them, call 855.NKD.LIME or email email@example.com.