Here comes that time of year again.
The leaves start to change. Football is back. The holidays are around the corner.
And somewhere around December 31st, a dealer walks out onto the used car lot, looks around, and says:
“Oh shit. What have I done?”
The problem usually didn’t start in December.
It started months earlier.
Your Sales Have Peaks and Valleys. Your Inventory Should Too.
One of the biggest mistakes dealers make is managing their used car inventory as if every month of the year is the same.
It’s not.
April, May, and June may be terrific months for your dealership. You may be selling 100, 150, or 200 used cars a month. Business is good, cars are turning, and the natural tendency is to stock inventory based on that sales pace.
Then September, October, November, December, and January come along.
The sales pace changes.
But too often, the inventory level doesn’t.
That’s when trouble starts.
I’m not suggesting that you lower your expectations. I’m not suggesting that you accept selling fewer cars. And I’m certainly not suggesting that you stop trying to grow your business.
I’m suggesting something much simpler:
Pay attention to the calendar.
Look Back Before You Look Forward
Pull your used car sales for each month for the last several years.
Lay them out month by month.
Then look for the trends.
You may discover that, while your business is growing from year to year, there are still predictable peaks and valleys in your sales volume.
Maybe you sold:
- 120 units in May
- 130 in June
- 110 in July
- 110 in August
- 95 in September
- 85 in October
- 80 in November
The exact numbers don’t matter.
The trend does.
If your sales historically begin to slow during the fall, but you’re still stocking inventory based on your May and June sales pace, you are creating a problem that’s gonna show up in December or January.
Don’t wait until you’re standing on the lot on December 31st looking at 30 or 40 more cars than you should have and asking:
“Oh shit. What have I done?”
Want to avoid huge write-downs at the end of the year? Pay attention. That’s all I’m gonna say, Tommy Gibbs