It wasn’t that long ago that as a dealer, I could buy all the inventory I needed using technology like ADESA Live Block, Manheim Simulcast, OPENLANE, OVE and SmartAuction.
I even had remarketers storing inventory that I could sell from. But those days are gone!
The strategies I used for the last five years are what many used-car managers are now using today.
I believe inventory today might be as hard to find as a win for the St. Louis Rams. With this in mind, and considering the current nationwide shortage of used-vehicle inventory, I was asked to write about the following topic: “Where do you find good affordable inventory?” That’s a good question.
Think of it in football terms. Not many games are won by teams that just run the ball; how much you need to run or pass is determined by how the game is going. For me, the running game represents inventory at the local auctions, trade-ins and other local sources.
Passing represents the inventory outside the market area. Most of us don’t need 30 cars in one day as much as we need 30 of the right cars, at the right cost every week.
By finding vehicles at the right cost, we will have more consistent cash flow (happy admin), better inventory management (happy sales team) and faster reconditioning turnaround (better profitability). Transportation is a cost factor, but there are excellent shipping solutions available. So do not be afraid to look outside the market.
Another option to find inventory is buying it off the street. If you’re groaning — stop. The vast majority of vehicles we want are in the hands of our customers. We have acquired and consigned some of the nicest inventory through this channel. Extra car deals come from people coming in to sell their vehicle, which simultaneously creates extra momentum needed to attract drive-by interest.
The old adage “customer traffic breeds customer traffic” is true.
Also quit hogging the ball — I mean inventory. I have been just as guilty. You get trade-ins that history has shown won’t sell on your lot, but you keep them to fill a space. It’s time to start paying attention to what sells from your inventory and how fast and what does not.
Historical data does not lie. A great inventory management system is a “must” these days. FirstLook or vAuto are tools that will redefine what “affordable” means for your dealership. If you use them, they can give you a whole new perspective on the probability of selling a car, which is everything when it comes to managing your inventory needs.
Also, it is time to set up a trading group. This is a group of dealerships that work together to buy and sell inventory from each other. Why would you do that? With inventory supply short, it will give you the ability to sell what you don’t need and possibly buy a reconditioned vehicle in return that will sell.
How are you going to do this with all you have to do each the week? Call OPENLANE and ask about their new Custom Trading Network. It will smoothly accomplish dealer-to-dealer inventory sales, and they manage the transaction side of things.
OK, so you have read to this point, and you are still thinking, “Nah, I don’t have the organizational structure or the time to do this.” You need help. No not psychological, just help. I have worked with a lot of professional, knowledgeable, franchised-focused wholesale brokers that are good at helping dealerships work their inventories with significant improvement.
There are also other ideas, like offering buyback programs, running a consignment program or running an on-site public consignment auction. If you have other ideas that are working for you, I would like to hear them. I think it comes down to many hours of hard work, including late-night searches and early morning online auctions outside your market place.
At its core, it’s about having a plan — a clear, well thought out plan. Work it and stick with it. Keep your eyes on the field. If you’re not doing any of this, and you have all the trade-ins you need, call me! Actually I would say get in the game, because you are missing profitable growth opportunities for your company. Search and buy what's right for your real inventory needs, keeping an out-of-the-box strategy in mind. Those are my thoughts on inventory for now.
I have to run now, or pass. I have four auctions starting. See you in the lens of the lanes.