New-car inventory management is not usually considered to be a driver of dealership profitability. Factory ordering constraints and forecasting supply/demand makes new-car inventory management challenging work. Mismanagement can lead to aged inventory issues and poor grosses.
But today, dealers can see faster turn and higher margins by using data insights to make better informed stocking, pricing and dealer trade decisions. One strategy includes stocking certain model/trim/color combinations that aren’t high-volume sellers, but turn quickly and at higher margins. In a recent study, vAuto found that dealers with the right inventory mix were turning their inventories quicker than dealers who primarily focused on stocking just the highest volume sales combinations.
View these materials to learn how to:
-Use market data to optimize your stocking decisions
-Use price to manage your inventory mix
-Improve your inventory with dealer trades
7. 3 Drivers to Nordstrom’s Inventory Turn
Leverage data insights
about demand to drive
smarter stocking
Proactive pricing to
maintain a balanced
inventory
Balance inventories
across network of
stores
Pricing DistributionStocking Mix
8. Polling Questions
• What information do you use today for making informed stocking decisions?
• Recent sales history
• OEM recommendations
• Model line days supply
• Total cars in inventory
• Intuition/feel
10. 3 Keys to Driving More Profit
from Your New Car Inventory
Pricing
Alignment
of pricing with
supply & demand
Dealer Trades
Making strategic
dealer trades to
get the right mix
Understanding
supply & demand for
every vehicle in stock
Inventory Mix
22. = $1,740 Loser?
Are We Giving Away Gross Unnecessarily?
11 Days in Stock
37 Market Days’ Supply
Only gray version in
the market
- $25,484
- $25,930
- $24,740
28. GREEN
Inventory Health Check Questionnaire
Stocking ------------------------------------------------------------------
What is my New Vehicle Aging Policy?
Pricing ---------------------------------------------------------------------
What is my New Vehicle Pricing Policy?
(Aging & market considerations)
Dealer Trades -----------------------------------------------------------
What % of my sales require dealer trade?
Health Checklist AMBER
Target is 65%
< 90 Days
Price early, not late
< 20%
RED
29. Quartile
Group
Annual
Turns
Annual
Gross
Annual F&I
and Doc
Floor Plan
Credits
New Vehicle
Department
1 4.7 $241,293 $847,847 $359,478 $1,448,618
2 7.5 $405,953 $973,778 $419,178 $1,798,909
3 6.1 $267,930 $848,077 $387,961 $1,503,968
4 3.8 $82,364 $480,282 $255,284 $817,930
Implications on the Bottom Line
Stay tuned for later in the webinar when we will have an opportunity for a couple of you to get a prize for hanging out with me.
Thank you to everyone on the call for taking time and submitting questions. My contact info is on this slide, contact me with any additional questions.