Contrary to popular belief in the industry: IF you are selling 10 units a month; you do not need 30 units on the ground.
This time of year historically, dealers “Load Up” in anticipation of Tax Season.
In 2019 that could prove to be a costly mistake.
If I am selling 10 units every month I am going to have 13 – 15 really good units “front line” ready and 3 in the shop.
In business terms I am “Keeping It Close To The Vest” – minimizing my cash out lay and maximizing my time.
Allow me to elaborate …
SUPPLY – has been and will always be a Dealers #1 source of grief, aggravation, time and money.
No supply – no sales.
If you’re keeping 30 units on hand and selling 12, well lets do the “simple math.”
15 units (over what you need ) multiplied by an average of $500 unit average recon = $7,500 cash out-of-pocket that you do not have to spend there.
Now lets add 1 hr per unit “shopping” time & 3 hours per unit (transport/recon/etc) = 4 hours per unit times 15 units = 60 hours!
So far, by slimming our inventory we’ve managed to save 60 hours and $7,500!
I don’t know about you, but 60 more hours is the real exciting part for me.
$7,500 can get me better (more) advertising, maybe a new sign or a better web page, possibly a marketing program or…. used where it’s needed most!
Now let’s get back to supply; with over 4 thousand dealers just in the Houston area alone that equals LOTS of competition for the same units.
The same 2008 Impala I am bidding on in a major urban auction will be less expensive at a smaller auction ( 100 dealers instead of 600 dealers there).
And what does all this have to do with your dealership – TRAVEL my friend.
If you want a more “steady” supply stream; you’re going to wind up on the road (physically or electronically) buying 200, 300, 500 miles or more away from home!
That brings in ADDED cost – transport!
From Florida – let’s figure $800 (usually less) on a unit I bought online for $1500 in back of what I could buy one here. I’m still $700 ahead of the game when the unit arrives!
That means more profit at market price OR a lower market price (usual profit) = quicker sale!
When you can take your time and really “shop” – good and sometimes great deals are there to be found.
You’re client wants a DEPENDABLE / FAIR PRICED unit and to buy it from someone they feel they can trust (that is an entire days class I teach – building trust).
What does all this add up to … simply put; it all adds up to more success on your part!
Keeping better, lower mileage units (time for shopping is now freed up) and working on the important things like marketing (gotta know who you are, what you carry and how to get you)!
More is NOT always better!
I would rather have 15 solid units (one’s I wouldn’t hesitate to hand my MOM the keys to) over 25 to 30 units that some little something is always going wrong with.
Time to reconsider your strategies.
As always I am available for private consultations.