Should You Write Down Your Inventory?
Don’t bother writing your inventory down. Unless of course, you’re going to commit to some serious changes. It’s not unusual at this time of the year for dealers to write their used car inventory down, take a big hit and a deep breath, and say “OK, done, let’s move forward.”
Many dealers lack the discipline to steer away from what got them there in the first place. Therefore, in six months or so, the owners are staring at the same hot mess they tried to fix back in December.
Used car managers and dealers fall back into the same old rut because of the fear of losses they will have by taking aged units to the auctions and dumping them.
It hurts me to say this, and I know it’s going to cause a few of you to unsubscribe from my newsletters but taking units to the auction and dumping them is just plain dumb.
If you thought enough of that 60-day old unit to bring it into your inventory as a retail piece, you should have been able to find a retail buyer for it at some number. There’s a number that every unit can be retailed at.
Therein lies the problem. You won’t retail it for what it’s actually worth, yet you’re willing to wholesale it for what it’s actually worth.
Hey Einstein, which way do you think you have the greatest opportunity to recover from a unit that was probably a bad decision from jump-street? Insanity.
The instances where you have to dump a previously assigned retail piece in the wholesale market should be very few. If you’re in the retail automobile business, then retail your units.
Yes, the grosses on all that aged stuff are going to hurt you for a while. Dumping in the wholesale market will hurt you worse. If you have a lick of discipline and stay with it, you will be fine and never, ever have another unit over 60.
My Life-Cycle management process gives you the disciplines and strategies that will keep you from saying, “More write-downs, here we go again.”
I’ve never met a dealer who has figured out the 60-day concept that said, “Geez, I’d like to go back to those days when we had units over 60.” I’ve met plenty of dealers that are disgusted that they have to deal with aged units and write-downs every year.
Enjoy your write-downs. That’s all I’m gonna say, Tommy Gibbs
P.S. If you are going to write-down your inventory let me coach you through it. It costs you nothing for me to help you.