One of the things I’m constantly encouraging my readers and clients to understand is that keeping units past 60 days is a really, really bad business plan. It borders on insanity.
If you still have 60-day-old-plus units, and/or you’re not a believer yet, I want to give you another way to frame it.
If you had $1,000,000 in the bank and each month the bank took $100,000 of your money and said “Thank you, goodbye, and have a nice day,” how long would you keep your money in the bank?
Well, well, well—hello 60-day-old units.
If you have $1,000,000 tied up in used cars, and $400,000 of it is over 60 days old, (I see numbers like this all the time) you’re losing a minimum of $40,000 month, give or take. If you want to debate the 10% idea then say goodbye to 5% and ring up a loss of $20,000.
One thing is for sure, you no longer have the $400,000 you thought you had. You do on paper, but you don’t in reality.
I have a lot of dealers who send me their GAP/ROI spreadsheet to review each month. (If you don’t know what it is, then you should find out.)
What is so shocking is when you sort the columns by days in stock or gross profit, more often than not, there isn’t any money being made after 30 days. Yep, 30 days. You don’t have to take my word for it. Just start tracking your mess and you will see.
We are all good sales people. Good sales people like to be sold. Often, someone is selling you on the idea it’s ok to keep ’em past 60 days. And even sadder, you might be selling yourself that it’s ok to do so.
A very smart man once told me that there are three places you should never put your money; in the bank, in the bank, in the bank.
Don’t be stupid. That’s all I’m gonna say. Tommy Gibbs