The Dynamic World of Car Sales

Taking a closer look at the U.S. car sales landscape, it’s evident that dealers are facing a critical imperative: recognizing and addressing inventory that isn’t generating opportunities for sales. Ignoring this issue can have dire consequences, as the passage of time can gradually erode the profit potential of late-model vehicles through depreciation.

Dealership Inventory Assessment: Amid factors like the UAW strike, the scarcity of affordable vehicles priced below the $30,000 mark, and rising interest rates influencing consumers’ choices, dealers must proactively scrutinize their inventory. This process extends beyond merely stocking popular models; it necessitates a keen understanding of what’s resonating with buyers and what isn’t.

The Risk of Ignoring Non-Performing Inventory: The gravest mistake dealers can make is turning a blind eye to inventory that’s languishing on their lots.? Each day a vehicle sits without generating interest is a day when depreciation takes its toll. Late-model vehicles, once prized for their resale value, can see their worth erode, ultimately diminishing profit potential.

Depreciation’s Silent Erosion: Depreciation is the silent predator of profit in the automotive industry. As a good friend once taught me, Time Kills Profits (TKP). The longer a vehicle remains unsold, the more it depreciates. This erosion can eat into the potential profit margin that dealers could have secured if they had acted swiftly and priced the vehicle to move on day one; instead, many dealers hold out wishing a potential buyer would fall in love with an overpriced vehicle.

Solving the Challenge:? Dealers must adopt a proactive and adaptive approach to inventory management. They need to identify non-performing vehicles and take decisive actions. Here’s how:

1. Data-Driven Insights:? Dealers should utilize data analytics and market research to identify which vehicles are attracting potential buyers and which ones aren’t. This information can inform pricing adjustments and marketing strategies.
2. Strategic Pricing:? Strategically adjusting prices to align with the dealer’s market demand is crucial. Understanding where similar models have sold and using this information to your advantage. Recognizing previously stagnant inventory and offering competitive pricing which in turn makes the inventory more appealing to buyers.
3. Marketing: Dealers should refresh their marketing efforts for underperforming vehicles.? Highlighting unique features, offering aggressive pricing, or targeting specific buyer demographics can reignite interest.?

Conclusion: In the dynamic world of car sales, dealers must recognize the imperative of addressing non-performing inventory. Time is the silent assassin of profit potential, as depreciation gradually erodes the value of late-model vehicles left unsold. Dealers who proactively assess, adapt, and take decisive actions to move inventory will maximize their profitability =and thrive in an ever-evolving market.

-Steve Everhart

Inventory Analyst

[email protected]