Over the years, many things have changed in this business, but one thing that has not is growth expectations. Whether year over year or month over month, nearly every dealership plans to grow its business in volume and margins. It takes a written plan to achieve those goals, not just the objectives but the method of achieving them. A frequent review of the progress and having the discipline to hold yourself and the team accountable is imperative, along with occasional adjustments if the original process may work differently than planned. It is easier to increase sales in segments that are underperforming than it is to acquire more inventory.
One of the many focuses we coach on with our weekly calls is selling what is in stock each month. If you carry 40 pickup trucks and your two-week sale rate is 15, there is a good chance that those five units will age and reduce the possibility of being profitable. To reduce the chances of aging inventory, it's imperative to do frequent reviews of where your inventory is, know what you have, and understand what is preventing you from selling what you are stocking.
Things to consider:
Is the vehicle getting any leads and online views?
Is it the vehicle or the price if there are no leads or online activity?
Are the miles high?
Are those higher-mile vehicles similar to taking longer to sell?
Is it different from your core product?
If you have one F-150 on your lot and the dealership down the street has five, what would make them come see yours?
Is the team knowledgeable/comfortable with presenting that product (including BDC)?
Have someone research and give a product demo for the group once it hits the lot.
Are there outliers in the competitive set that are misguiding the price?
Only trust the information after diving into the data.
Is the online listing what you expect it to be (review pictures and descriptions)?
Inspect what is expected and adjust accordingly when needed.
As inventory comes and goes, it's equally important to review the competitive vehicles in the market as a vehicle ages, not just on day one. In a depreciating market, if the vehicle is aging, there could likely be some newer vehicles coming into the market that could be of better value. Being proactive with frequent reviews can reduce the chances of a vehicle aging, reducing the margin opportunity. Seasonal trends can also be a factor that must be considered this time of year. The day supply of sports cars and convertibles in northern markets may be lower in August but know that will change in the coming months.
If a vehicle is listed online and serviced in a timely manner, and everything else is aligned, but there is minimal traffic in the first thirty days, the question is whether it is the vehicle or the price.
On the other hand, if a vehicle has ten leads and has not sold, it is obviously not the price. Does the vehicle have an issue that has not been addressed, or is the process of how those leads were ineffective?
Bottom line: Get intimate with the inventory every day, review inventory physically and online often, review the team's communication with customers, and listen to calls daily. (We cannot coach if the weaknesses are unknown.) When questioning what may have prevented a vehicle from selling timely, a lesson can be learned that can potentially prevent or minimize the chances of it happening again.
Happy Selling!
For more information or a free analysis using your data, visit www.lotwalk.com.
-John Ruswick
Performance Engineer
Lotpop Inc.
johnw@lotpop
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