Pub. 1 2019 Issue 2

W ith the used vehicle department continuing to contribute a larger share of the dealer- ship’s overall profits, it is becoming essential that you have a good used vehicle inventory manage- ment system in place. Proper used vehicle inventory management is also an essential ingredient to ensuring you maximize your new vehicle department volume and gross profits. In today’s industry, there is no shortage of quality used vehicle inventory management software systems available. They all perform with various levels of data and success. However, it is still very import- ant that the dealership personnel directed by the used vehicle manager have a complete understand- ing of the functionality of the software (are they maximizing its capabilities), the end purpose of the software (what is the mission), and a deep under- standing and commitment to what the software is trying to accomplish (do they follow it). It still takes PEOPLE to execute the processes and philosophies of inventory management, and to do that they must be trained, motivated, and compensated to achieve those inventory management goals and objectives. In this article, we will look at the overall inventory management concept. There is much more to proper inventory management than can be presented in this article; however, this is an excellent place to begin. Proper acquisition and disposal of inventory will help guarantee you do not miss sales or gross profits. A poorly managed mix and turn of your used vehicle in- ventory will have a ripple effect that can erode profits and volume under the surface without you even know- ing it. A well-managed inventory that is mixed correct- ly, stocked appropriately, priced right, not over aged and turned every 45 days will ensure you achieve max- imum profitability in both front end and F&I gross. To begin establishing an effective inventory manage- ment system, you first need to step back and look at the BIG picture. Think of your used vehicle inventory as a flowing river. The goal is to keep the river flow - ing at a steady and desired pace. If water flows into the river faster than it can flow out, you have a flood and damage is done (excessive aging inventory). If water flows out of the river faster than it flows in, the river dries up and can no longer sustain life around it (missed sales opportunities). The same occurs with your used vehicle inventory. In- ventory flows in through trade-ins and purchased units. And the inventory flows out through retail and whole - sale sales. You must ensure that inventory is coming in at a pace that can sustain the desired or actual flow out. Likewise, you must ensure that inventory is flowing By Mike Edwards, President/CEO First Group Family of Companies LET THE RIVER FLOW … NAVIGATING USED VEHICLE INVENTORY MANAGEMENT! 8 Issue 2 2019