Updated August 16, 2023
“Independent dealers with floor plans know that quick vehicle turn times are a key factor in maximizing gross profit. The longer a vehicle sits on the lot, the higher your holding costs climb.
To understand your dealership’s daily holding cost, divide your monthly holding cost per unit by the number of selling days in the month. With your average daily holding cost in mind, you can take a proactive approach to moving your inventory through some strategic strategies to keep your turn times down.
Here are 6 things independent dealers can do to help reduce their inventory turn times:
1. Purchase Vehicles that are In-Demand with Consumers – The best way to ensure a quick turn time is by purchasing the vehicles your customers are looking for. Make sure that you stay up to date on the most in-demand vehicles in your market. If you have a Kinetic Advantage floorplan you can run reports in Kinetic 360 to see which vehicles have the shortest turn time on your floorplan and your Kinetic Advantage rep can help guide you in making strategic inventory purchases. You can also use Kinetic’s Auction Hub portal to access the retail comp data of 6 million market listings to purchase vehicles with low market scarcity.
2. Keep Inventory Updated Online and Your Staff in the Loop – Research shows that 80% of car buyers prefer to shop for vehicles online, so be sure that the inventory listed on your website is updated with detailed information and multiple high-quality photos. Make sure that your sales team also stays on top of any inventory changes so they can contact customers who may have stopped by before but couldn’t find the vehicle they were looking for once that vehicle is available at your dealership. They can also reach out to customers that were looking at a vehicle that is now available at a reduced price.
3. The Key is in the Buy – If you’re signed up for Kinetic+ you can use One Auction View to search for inventory at multiple digital and physical auctions. This will ensure you find the best inventory by seeing all available auction results.
If you don’t know a vehicle exists at an auction you’re not searching – you can’t buy it. The key is to buy sought after vehicles outside of your geographic area. If you shop for vehicles that are hot in your market but buy them in an area where they are not in demand, you can make up for the spread even with the increased cost of transportation.
If you’re worried about purchasing inventory that you can’t view in person, pay close attention to every single photo listed since condition reports are not always accurate. For additional assurance, you can always contact the auction the day before the sale and ask for a sales manager to walk that car for you and address any questions or concerns you have.
4. Reach the Right Customers with Targeted Marketing – Ramping up your marketing efforts is another way to decrease turn time, but it is important to implement a marketing strategy that’s going to reach customers who are looking for the inventory you carry.
Utilize tools like Google Analytics to get detailed demographic information on the people visiting your website so that you can create emails and digital ads targeted to them. If you’re running a promotion, you should also consider featuring the vehicles that have been on your lot the longest to help get them in front of a bigger audience.
5. Reduce Holding Costs – The longer inventory sits on your lot, the more it’s going to cost you. That’s why you should take the time to break down how much each unit costs you every day it remains on your lot.
Once you know this amount, you should take a look at your personal expenses including things such as employee salaries and your advertising budget to determine the overall profitability of your inventory. You can then look for ways to reduce these costs such as focusing on staff retention or changing your advertising strategy to maximize your profitability.
6. Close the Sale Quickly – From the preapproval process to signing on the dotted line – make sure that your sales process is designed around creating an efficient buying experience for your customers. Utilize a mix of virtual and in-person sales tools and techniques to make the process as convenient as possible for your customers.
And don’t underestimate the power of maintaining a high level of customer service to draw future business. The experience after making the sale can often be the deciding factor on whether a customer will refer friends or family members in the future to your dealership.
Make sure you manage any reconditioning issues that arise quickly and process the registration and titling paperwork immediately. The last thing your store needs is to be bogged down with customers waiting for their vehicle title or registration.
Things like curtailments, advertising, detailing and maintenance can contribute to a vehicle’s turn time but independent dealers who have a Kinetic Advantage floorplan have access to detailed vehicle information that can help them better manage their aging inventory. For more information about how tools like Kinetic 360 and Kinetic+ can help you to reduce your turn times visit www.kineticadvantage.com.
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