As the year draws to a close, automotive dealers everywhere are seeking ways to sharpen their strategies and enter the new year prepared for success. One essential concept that continues to transform inventory management is bucket management. As discussed in depth during the recent LotTalk podcast episode, “Does Your Bucket Have a Hole?” bucket management isn’t just a buzzword—it’s a game-changer for optimizing inventory flow, maximizing profitability, and maintaining consistency.
What Is Bucket Management?
Bucket management revolves around the principle of selling and keeping 65% of inventory within the first 30 days. This proactive strategy aligns inventory turnover with periods of maximum profitability, preventing aged vehicles from eroding dealership margins. It’s more than a tactic—it’s a philosophy that emphasizes balance, precision, and consistency.
Why Bucket Management Matters
1. Volume and Gross Profit: Selling vehicles quickly ensures they’re moving during the prime profitability window. By the time a vehicle hits 30 days, it has already passed its peak gross margin potential.
2. Operational Efficiency: Properly managing inventory buckets—0–15 days, 16–30 days, and so on—reduces bottlenecks in service, detailing, and marketing processes, streamlining operations for consistent performance.
3. Financial Stability: For ownership, bucket management helps preserve net profit by avoiding excessive holding costs and depreciation, which directly impact the dealership’s bottom line.
Addressing the Challenges
Despite its benefits, bucket management is not without challenges. Many dealerships operate in a reactive mode, focusing solely on aging inventory or newly acquired units while neglecting the critical middle buckets (16–30 days). This “bleed-through” creates inefficiencies, with fresh inventory aging unnecessarily and older vehicles weighing down overall performance.
The LotTalk hosts emphasized the importance of tackling this issue head-on by implementing a consistent acquisition and pricing strategy. As co-host Ronaldo Leonard pointed out, the key lies in maintaining proactive processes that adapt to market conditions without deviating from long-term goals.
Keys to Consistent Bucket Management
1. Plan and Execute: Success begins with a clear, actionable plan. Whether it’s defining roles for team members or setting sales goals for each inventory bucket, consistency in execution is paramount.
2. Monitor and Adjust: Use data to track performance across buckets. Tools like VAuto provide insights into pricing trends, shopper activity, and sales performance, allowing dealerships to make informed adjustments.
3. Balance Proactivity and Reactivity: While reacting to immediate challenges is necessary, staying proactive ensures long-term success. This means consistently acquiring inventory aligned with sales trends and monitoring downline processes like reconditioning and merchandising.
What’s Next for Dealerships?
As dealerships face tightening margins and fluctuating shopper demand, mastering bucket management will be critical for staying competitive. Whether it’s adapting to “15 is the new 30” dynamics or managing downline pressure from increased inventory turnover, dealerships that embrace this strategy will find themselves better positioned for growth.
The team at LotPop encourages dealerships to ask themselves: Does your bucket have a hole? Identifying and addressing inefficiencies today will yield smoother operations and higher returns tomorrow.
Final Thoughts
Bucket management isn’t just about selling cars; it’s about selling the right cars at the right time, consistently. By focusing on processes, maintaining balance across inventory buckets, and leveraging data to inform decisions, dealerships can not only achieve but sustain success.
For those eager to learn more or refine their strategy, the LotPop team is ready to help. As John Anderson aptly put it, “Our job is to maximize the return on investment for dealership owners. Consistency in bucket management is how we achieve that.”
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