Stock Turn Simplified

Stock Turn Simplified

Stock Turn can be a complex KPI (Key Performance Indicator) to understand but one that is very important to your operational performance.

What Is Stock Turn?

Good stock control is one of the most important (and most ignored) aspects of a used car business. Ignoring Stock Turn means your profits could drain away and as time goes on; your costs become bigger whilst your profits become smaller.

In simple terms, Stock Turn is the amount of times per year that the same money is used to buy another car.

Here is how it works:

As a general guide, the quicker that a business turns over its stocks, the better or put another way, the less money you will need to invest and the more profit you will make.

The Stock Turn Calculation

The calculation that is used to work out your Stock Turn ratio is straightforward: Take your annual used car retail sales (the number of used cars that you have sold in one year) and divide this by the number of used cars you have in stock. e.g. if you have made 750 used car sales in one year and you have 65 used cars in stock, the calculation would be 750 ÷ 65 = 11.5. The 11.5 is the number of times that your stock has turned in one year which is an acceptable stock turn. Ideally dealers should aim to turn their stock over at least 8 times per year.

How To Achieve A Good Stock Turn

In an ideal world, a good stock age policy is 60 – 90 days. If a vehicle is not sold to a retail customer after 90 days of the purchase date, we would advise that you sell it back to trade and replace it with something else that will sell. There a few other ways to improve your Stock Turn:

•  Increase sales without increasing your stock levels
• Decrease your stocks without interfering with sales
• Increase sales and at the same time, reduce your stock levels

If you have not done this recently, have a look at your aged stock and select cars that are over 90 days in stock and let Merlin Car Auctions help you sell these cars to hundreds of buyers at one of our 4 auctios every week?

Don't ignore it, act on it now! Call us now on 045 988700

Patrick O'Reilly