Money is made in the buy and lost in the process. Here’s how to start turning faster, with tips from real dealers.
Inventory turnover is the lifeblood of vehicle dealerships. The faster you can move cars off your lot and into the hands of eager buyers, the more profitable your dealership becomes. However, achieving high inventory turn is easier said than done. It requires a strategic approach, excellent management, and a keen understanding of market trends. In this comprehensive guide, we’ll explore essential tips and strategies to help car dealerships turn their inventory faster and boost their bottom line.
1. Diversify Your Inventory
One key strategy for increasing inventory turn is to diversify your vehicle selection. While it’s important to have popular models in stock, consider adding a variety of makes and models to attract a broader range of customers. Keep an eye on emerging trends and customer preferences, as they can change rapidly. Stay ahead of the curve by offering hybrid and electric vehicles, as well as other eco-friendly options, which are increasingly in demand.
Regularly monitor the vehicle makes and models with the fewest days on market – these vehicles are in high demand and can keep your cash flowing so you can regularly acquire new inventory without major flooring expense.
2. Join a 20-Group
Research is a crucial component of inventory management. A 20-Group can help you share tips, advice and see the modern tactics other dealers (who aren’t competitive to you) are using to stay ahead of the curve. 20 Groups can be found through NADA or the NIADA, and many specialize by type of dealership like buy-here, pay-here or wholesale.
Use data from industry reports, online forums, and customer feedback to identify trends in the market as well. Keep an eye on local and national economic conditions as well, as they can impact consumer buying habits.
3. Price Competitively
Pricing plays a pivotal role in inventory turn. Set competitive prices that align with market trends and the condition of the vehicles you’re selling. Avoid overpricing, as it can deter potential buyers, but also be cautious not to undervalue your inventory, as this can lead to lost revenue.
Regularly assess and adjust your pricing strategy based on market conditions and the performance of specific vehicles. (Click here to get a free analysis of your frontline inventory to see which vehicles are competitively priced.)
4. Embrace Online Marketing
In today’s digital age, online marketing is essential for car dealerships. Establish a strong online presence through a user-friendly website, social media platforms, and online advertising. Invest in high-quality photos and detailed vehicle descriptions to attract potential buyers. Engage with customers through social media, respond to inquiries promptly, and utilize email marketing to keep them informed about your inventory and special promotions.
While some dealers are frustrated with low-quality lead-generators and hesitant to invest, at the very least your website needs to showcase your dealership’s quality and inventory well. Spend time (and yes, some money) investing in a solid website and online reputation.
A high-quality CRM is critical to making sure you are keeping track of deals, sales, customer outreach and sales activity. If you aren’t investing in one, you need to start your search ASAP.
5. Implement Efficient Inventory Management Systems
Effective inventory management is at the heart of turning inventory faster. Invest in software systems that enable you to track and manage your inventory efficiently. These systems can help you monitor your team’s activity and performance, as well as where your process has the most hang-ups. Many dealerships try to keep track of inventory on whiteboards or spreadsheets downloaded from their DMS. That method of managing inventory leads to lost cars, finger-pointing on who didn’t do their job and a frustrated dealership that isn’t making as much money as it could.
How can you tell if your current solution is enough? If the answer to one or more of these questions is yes, you need a better way to manage inventory:
- Have you lost a vehicle on the lot in the last month?
- Are you struggling to know who your hardest-working team members are?
- Is Sales not as informed as you want them to be about your frontline inventory?
- Are you feeling like you can’t take more than a day off without worrying about the dealership?
Implementing a just-in-time inventory system can reduce flooring costs and improve cash flow. (Check out how Carketa has helped dealers of all sizes turn inventory faster with a quick demo.)
6. Streamline the Sales Process
A streamlined sales process can significantly impact inventory turn. Train your sales team to be knowledgeable about the vehicles in stock and to provide exceptional customer service. Implement digital tools that allow customers to browse inventory, schedule test drives, and complete paperwork online, reducing the time between interest and purchase.
7. Maintain Vehicles Regularly
Well-maintained vehicles are more likely to sell quickly and at a higher price. Establish a rigorous maintenance schedule for your inventory, including regular inspections, detailing, and necessary repairs. Keep thorough service records to build trust with potential buyers and demonstrate the quality of your vehicles.
8. Organize Events and Promotions
Host special events, sales promotions, and themed campaigns to attract customers and create a sense of urgency. Limited-time offers, discounts, and giveaways can incentivize potential buyers to visit your dealership and make a purchase. Promotions can help you clear out older inventory and make room for newer models.
9. Provide Exceptional Customer Service
Exceptional customer service can set your dealership apart from the competition. Treat customers with respect and attentiveness. Encourage reviews and referrals by going above and beyond to meet their needs. Satisfied customers are more likely to return for future purchases and refer friends and family.
10. Monitor and Analyze Performance
Regularly analyze your sales data and inventory turn rates. Identify slow-moving vehicles and take action to promote them or adjust prices accordingly. Continuously refine your strategies based on performance metrics and customer feedback. Adapt to changing market conditions to stay competitive.
11. Manage Inventory Risk
While you aim to turn inventory faster, it’s essential to manage inventory risk. Don’t overstock on vehicles that are prone to rapid depreciation or lack consumer demand. Be prepared to adjust your pricing or marketing strategies for slower-moving inventory to minimize losses.
In conclusion, turning inventory faster in a car dealership requires a combination of strategic planning, effective marketing, exceptional customer service, and efficient inventory management. By diversifying your inventory, staying informed about market trends, and implementing these tips, you can increase turn, boost profitability, and ensure the long-term success of your dealership. Remember that the automotive industry is dynamic, so staying adaptable and proactive is key to thriving in this competitive landscape.