BRAM Auto Group’s four north New Jersey stores – Honda, Nissan, and Toyota dealerships branded after the Route 22 highway that runs between them and Hudson Honda in West New York, N.J. – are a microcosm of how dialed in the group’s processes are when it comes to managing inventory.
A look at the 486 cars sitting on the four lots during the month of April reveals that only 32 were more than 61 days old. Of that 32, 15 were pending wholesale, meaning they were either sold or gone. The remaining 17 units sat on the four lots an average of 68 days. It’s an especially impressive feat given the group’s pricing strategy.
“We operate under the belief that, in the first 30 days, we don’t need to be the cheapest game in town,” said Carmelo Giuffre, the group’s vice president of pre-owned operations.
The executive notes that the group operates under a strict 60-day turn policy when it comes to its pre-owned inventory, but decisions on whether to adjust pricing and how a unit is merchandised begin on Day 45. And if the group takes a vehicle in on trade, gets it frontline ready, and not a single customer cracks the doors in the first four to seven days, the vehicle is immediately sent to auction.
“That’s why we don’t have $1,600 losers,” Giuffre adds.
A new approach
Seven years ago, Giuffre spearheaded a major change in the organization’s approach to managing inventory. He began staging weekly meetings at each of the group’s rooftops. The conversations revolve around an evaluation sheet he developed based on data generated by DealerSocket’s Inventory+, which the group installed in November 2007. Reviewed is transaction data, appraisal performance, each dealership’s buy and overstock lists, and much more.
The group has even created filters within Inventory+ so Giuffre and each dealership’s management team can, for example, look at how specific units with the same equipment performed. From that, the dealership will create watch lists, which simply means monitoring what competitors are doing from a pricing standpoint.
As for appraisals, the group wants to know if opportunities were missed and which appraisers are having big wholesale losses. Giuffre and the management teams he meets with also want to know how vehicles taken in on trade are booked out. The review also includes a check of Inventory+’s TrueTarget and TrueScore features, which provide live competitive pricing data as well as aggregated transactional data. The goal is to see if a vehicle was advertised correctly.
The Ideal Inventory Model
This attention to detail is why, for example, the group’s Route 22 Honda in Hillside, N.J., is turning inventory every 14 days while averaging well north of $1,000 per copy in front-end profit. The feat is the result of the group’s approach and Inventory+’s analytics engine, which is based on what’s called the Ideal Inventory Model. It’s a strategy rooted in the belief that every dealer, through live and historical data, has a core set inventory – or vehicles a dealer does well with from both a profit and turn standpoint.
A peak at Route 22 Honda’s April performance reveals that 90% of its inventory consisted of core vehicles. The three other stores in the group’s north New Jersey segment weren’t far behind, as between 46% and 65% of their inventory consisted of core vehicles. And they turned that inventory every 24 to 27 days.
“This is where Inventory+ stands above the rest; it makes recommendations based on how the market is doing and how a vehicle does at your store,” Giuffre says. “You don’t necessarily need to be the cheapest. You just need to have the right cars.”