Cash flow is the lifeblood of any independent auto dealership—and as such, dealers simply can’t afford to have aging inventory that languishes on their lot. Inventory needs to be sold in a minimum of 90 days—and at some dealerships, the standard is closer to 45 days. Once a car passes that threshold, it becomes a liability. This makes it imperative for a dealer to have plans in place to address slow-moving inventory, and ultimately to turn it into cash some way or another.
Here are a few tips to keep in mind as you try to put such a plan in place at your dealership.
Hold a Sale
The most obvious way to move older inventory is to discount the price—creating a demand by improving the value, and promoting the sale heavily through your online marketing channels. Of course, this will eat into your profit margins, but again, aging inventory eventually becomes a financial liability—so it’s best to cut your losses.
And there are different types of sales you might consider:
– A clearance sale simply allows you to flush out all your excess inventory; you might even plan for a couple of clearance sales each year.
– A flash sale hinges on FOMO—the fear of missing out; create a small window for discounts, and instill in your buyers a sense of urgency.
– Item-specific sales—for instance, sales on pickups—might let you more precisely target your intended buyers.
Instead of holding a sale—or perhaps in addition to—you might try to sell older cars through different channels. A highly targeted Facebook Ads campaign is one example. And, if you haven’t listed it on Craigslist, that can be a great way to get some new eyeballs on the vehicle in question. Of course, Get My Auto’s Craigslist Wizard app can be helpful here.
Don’t Let Your Inventory Get Dated to Begin With
Finally, it’s glib to say that you should just avoid aging inventory in the first place—yet there’s an element of truth here: As you purchase inventory with your floor plan credit line, it’s imperative to be judicious, and not to buy more than you can realistically expect to sell. And it’s also important to have firm guidelines in place to move inventory within a certain timeframe—say, 90 days—before it’s essentially written off as a loss.
Strategy and sound marketing are both integral here—and if you need help with either, our team can help. Get My Auto is a marketing company that works exclusively with independent auto dealers, and we know how to move the sales needle on your behalf. Reach out to our team today to learn more.