One of the advantages of having spent years working with dealers and analyzing inventory performance inside our UpYourGross software platform is that patterns become very clear.

And some of those patterns are impossible to ignore.

One of the most consistent observations we’ve made is the dramatic difference in gross profit performance based on where a vehicle originated.

Trade-ins.

Auction purchases.

Rental purchases.

Customer acquisitions.

I don’t doubt that you already know this…I do suspect you might need reminding.

The best-performing dealers understand that not all inventory sources should be managed the same way.

Auction purchases don’t deserve the same shelf-life as a nice trade or customer acquisition. Yes, you know that, but are you paying attention to it?

What continues to surprise me is how many dealers are still holding vehicles beyond 45 days while trying to achieve the same gross they expect from a trade-in.

The logic is understandable: every once in a while a miracle happens and an aged unit sells with a healthy profit.

But building a strategy around miracles is rarely a good business plan.

Even when that occasional win occurs, the return on investment is often disappointing after considering depreciation, floorplan expense, lost opportunity, and the capital tied up in the vehicle.

The lesson is simple.

Pay close attention to the gross profit expectations you have for each inventory source. More importantly, monitor the age of those vehicles and be willing to adjust your pricing strategy before a unit becomes an expensive problem.

The dealers who consistently outperform their competitors understand Life-Cycle Management. That’s all I’m going to say.

— Tommy Gibbs