An Aging Policy Isn’t a Plan

To avoid an inventory problem, you need a plan of action that covers merchandising, your plan for per-unit profitability, and all the critical stages in an inventory unit’s lifecycle.


Inventory success in 2019 will depend on how you answer the following question: Do you have a policy or plan when it comes to aging inventory. Most dealers will say they have a policy when a unit reaches 60 or 90 days, but a policy isn’t a plan. What’s the difference?

Well, what’s the process when a vehicle reaches 15, 30, 60, or 90 days? What will you do differently to merchandize units? How are you going to price those vehicles? Are you going to place those aging units in different spots on your lot? Bottom line, what are you going to do differently with a unit as it ages through its lifecycle?

The answers to those questions need to be in your written plan.

Virtual Merchandising

You also have to look internally and ask the following: How long does it take to get photos on a car? What about a description? How long do you price a unit competitively? If your inventory management system can’t report on those statuses, you’re operating blind.

We have very successful dealers who can have a vehicle they just took on a trade merchandised on their site within two to three days. And what they’re doing is giving themselves an extra week or two to sell the car. It may not be frontline ready, but it’s available virtually to everybody in the market.

Profit vs. Turn

I want to finish up this piece with one other trend, which I think is critically important. See, one of our competitors in the inventory management space announced a major change in philosophy earlier this year. See, the biggest difference between us and everyone else leading up to that announcement is that we, here at DealerSocket, have always looked at how well a dealer performs on a particular unit. And for those vehicles the dealer does well on from a profitability standpoint, well, there’s no reason to get down in the gutter with every other dealership engaged in a race-to-the-bottom pricing war.

See, DealerSocket has always believed every lot unit deserves a chance to be sold at a profit. We’re glad our competition has finally come around, because a race to the bottom is no way to conduct business.

This content may express opinions and ideas that are not intended to be official statements from DealerSocket, Inc.



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