Turn times – or how quickly a vehicle leaves your lot – are an essential measurement of an independent dealership’s performance. Faster turns translate to improved cash flow, a competitive edge, and ultimately, higher profits.
If you read our previous article, 4 Factors Influencing Used Vehicle Inventory Turn Time, you know exactly what obstacles to avoid. So, let’s steer our way back into the fast lane with some tips on how your independent dealership can cut down on lot rot and keep those turn times short.
Price It Right, Price It Now
The golden rule of inventory turns is price it to sell, not to sit. When turn times are on the rise at a dealership, it may be due to a “set it and forget it” mentality for pricing the on-lot cars. If that’s the case, it may be a good idea to try dynamic pricing, when the price of the car is set based on market demand, supply, and other real-time factors.
In order to adopt a dynamic pricing strategy, you’ll first need some quality data. This could mean:
- Market data, such as average listing prices
- Vehicle-specific data, like mileage or year
- Your dealership data, such as inventory level or purchasing expenses
Once collected, the data can be connected using pricing intelligence tools or even your customer relationship management (CRM) software to analyze and identify competitive pricing.
You may even consider automating this process; just be sure to regularly review the price changes and always consult with your financial or legal advisors before making any hasty decisions.
Here are few pricing quick tips for turn time:
- Trust the Process: No two dealerships are exactly alike! You should expect a bit of a learning curve as you find your pricing sweet spot. One place to start may be at or slightly below market value, and then adjust from there.
- Use Promotions Strategically: Use targeted promotions and limited-time discounts to create urgency and move slower-selling inventory.
- Maintain Brand Value: While promotions are valuable for certain situations, use them only when necessary so you’re not setting unsustainable pricing expectations and your customers always expect you to offer a promotion.
Make every dealership process efficient
Selling used cars isn’t a single process, it’s a whole bunch of them connected through your dealership’s business routines. These processes can include:
- Acquisition
- Trade-ins
- Title management
- Reconditioning
- Sales cycles
- Digital Marketing
When the processes are butting up against one another, usually that’s when you see those turn times start to creep up. But when dealers really look at each process as touch points it’s usually easy to spot pesky bottlenecks along the way.
There are a few strategies to improve your independent dealership’s efficiency:
- Prioritize those trade-ins: We’ve previously talked about the importance of customer trade-ins and other non-auction purchases. Trade-ins are tricky; there are a number of customer-facing steps (appraisal, test drives, applying for financing) and internal dealership steps (sales process, inspections, reconditioning). Take a close look at the sequence of steps, and how you can balance your customer’s time with your dealership’s need for risk prevention.
- Check in to see what condition your reconditioning is in: Having a well-organized and efficient reconditioning process is crucial. This could involve clearly defined tasks, skilled technicians, and readily available parts. Minimizing the time a vehicle spends in reconditioning means it gets to the sales floor faster.
- Take the Omnichannel Approach: A smooth and efficient sales process, from greeting the customer to finalizing the paperwork, is essential. This involves well-trained sales staff, digital tools for document processing, and clear communication between departments.
Focus on your dealership’s inventory management
If you’re after faster turn times, you’ll need to get a handle on how your source, measure, and manage your on-lot inventory.
If you’re worried about inventory management and turn time, there are several quick tips that could help, such as:
- Have an exit plan for aged inventory: Don’t let older vehicles become a financial burden. Have a plan for wholesaling, deep discounting, or auctioning them to free up space and capital.
- Maintain healthy cash flow: Always aim for a balance between inventory investment and cash flow. Don’t max out your budget by purchasing too many vehicles at once. Instead, focus on acquiring vehicles that are likely to sell quickly, based on the market and your sales data.
- Don’t limit your sources: Build relationships with wholesalers, participate in auctions, and encourage trade-ins to ensure a steady stream of desirable vehicles.
Choose the right inventory floorplan provider with AFC
At AFC, we’ve been helping solve the unique challenges faced by independent dealers since 1987. Our floor plan financing solutions are never one-size fits all, and we offer flexible terms and fast payouts, empowering you to:
- Stock your lot with high-demand vehicles
- Quickly seize market opportunities
- Maintain a rapid inventory turn rate
- Accelerate Your Growth Today
Achieving a fast inventory turn is within your reach. By implementing these strategies and partnering with AFC for financial support, you’ll be well on your way to improved efficiency, stronger cash flow, and increased profitability.
Ready to shift into high gear? Get started with your application today to discover how our floor plan financing can help your dealership sell more cars faster.
Disclaimer: Descriptions of AFC floorplans are for illustrative purposes only. Terms of AFC floorplan financing are subject to a final written agreement acceptable with AFC. AFC does not guarantee any results for floorplan financing and examples are for illustrative purposes only. Dealers should consult their own advisors to make independent business decisions regarding floorplan financing.
“AFC” refers to Automotive Finance Corporation, Automotive Finance Canada Inc., and AFC Cal, LLC in their respective jurisdictions. All California transactions are through AFC Cal, LLC. California loans will be made pursuant to Department of Business Oversight California Finance Lenders License. Canadian transactions are through Automotive Finance Canada Inc.
