Google, Bing, Twitter, Facebook, Yahoo, Linkedin, YouTube, Plaxo and hundreds of other seemingly strange assemblage of letters are all words that have recently become part of our daily vocabulary. Each one of these new words represents new technology. Chances are, many of you are familiar with some, or perhaps all, of these technological systems. Many of you have embraced this new technology and are using it every day.
Another new technology that works very well in many Dealership’s today is, automated, New and Used Vehicle Inventory Management. There are several companies out there doing this including mine. It has long been known that inventory management can make or break a company. In fact, part of Chrysler’s problems over the past couple of years was largely due new vehicle inventory mismanagement. One of the secrets of success of the world’s largest retailer-Wal Mart, is precise inventory management. Each store location knows, without any doubt, the speed of the turn of over 15,000 individual items. They know how many they have on the shelf, how many they have in the pipeline, if the rate of turn is increasing or decreasing, their return on investment, how price effects shelf movement and many more key indicators that relate to increasing sales with a more effective inventory. If it works well, they get more, if it doesn’t, they cut back. They do pay attention to regional trends but I can assure you that different stores, in different locations, in the same market area, have vastly different inventories. A good example is North side Chicago vs. South side Chicago. Same Regional Market, completely different demographics, completely different inventories.
Any Vehicle Inventory Management system or process you choose must focus on your store, your location, your traffic, your activities and your demographics first. Market area information is important but your inventory needs to match your stores specific needs. The vehicle inventories that you have investments in are no different than any other type of investment portfolio. Some investments clearly perform better than others. It is only natural that when a specific portion of your portfolio is producing a significant return, you would want to do more of it. Conversely, when other portions of your investment portfolio are underperforming, you would want to do less of it. The secret to maximizing this profit center is to know exactly what each individual investment has done for you in the past, what it is doing for you now and how the investment needs to be structured to grow your sales in the future.
Here are a few of the types of information available for your Dealership with today’s technology and a few clicks of your mouse.
• The top ten new vehicles you are furthest away from the target supply on the long side (by model #)
• The top ten new vehicles you are furthest away from the target supply on the short side (by model #)
• The top ten used vehicles you are furthest away from the target supply on the long side
• The top ten used vehicles you are furthest away from the target supply on the short side
• The vehicles (both new and used) that retailed 2 or more times in less than 15 days that you are out of
• Your return on investment by year, make, model, category, target inventory and actual stock
• Specific statistics by appraiser including % acquired, retail and wholes gross average and much more
• The top 50 new units in inventory that are likely to cost you the most interest to the ultimate day of sale by model number and color
• The retail speed (in days to sale) of new vehicles by specific model number, color and equipment
• Specific activities like web hits, demo drives, pricing rank in your market area
• Where to find the vehicles you need and want
• A Stocking Guide for both New and Used vehicles
You must first come to the realization that your store cannot be all things to all people. Many factors are in play in determining why your customers are coming to your lot and what they are looking for. These factors include Demographics, New Vehicle Franchises represented, reputation, lot size, location, advertising budget, sales people, inventory choices and many more. Some vehicle categories, model years and specific models, simply cause you wholesale pain. When you determine what these specific categories and vehicles are, you can simply “stop doing that”.
For the used Vehicle department, I advocate the implementation of a system that will separate your sales, gross and inventory first by categories of vehicles (Small cars, Mid size cars, Sporty cars, Full size cars, Small Pickup, Full size pickup, Small Sport utility, Large sport utility, Mini-van and Regular van.) and then by the 8 most recent model years within each category. Your stocking guide must include your target supply number for each category and model year including the number of units and the desired ready to go ACV. I suggest your target to be no more than a 45 day supply. Most large used vehicle operations are now shooting for a 35 day supply. Your stocking guide needs to be based on actual sales rate, not forecasts. This “ideal” stocking guide number should then be compared, on a daily basis, to the actual availability for each category and model year. If you are long or short in any category, develop an action plan with your managers to correct the condition. Daily vigilance in seeing that the action plan is being implemented is vital. Remember, “In the absence of feedback, any behavior becomes acceptable”
If you would like to see what your store looks like using your numbers coupled with the latest vehicle inventory management technology, drop me an E mail or give me a call. You may be surprised at what is available. Embracing today’s technology will make you more money tomorrow.
Remember, you cannot be all things to all people and it is impossible to stock everything. The bottom line is, when your Dealership has more on the ground, of what your customers are looking for, what do you think will happen?