The Importance of Effective Inventory Management for Car Dealerships
Is your dealership tracking your inventory effectively? You are likely regularly and aggressively tracking the ins and outs of your inventory, but what steps are you taking to optimize your turnover rate?
Strategic management and optimization of your dealership’s inventory can help you better meet your customers needs, reduce costs, and increase your revenues. Let’s take a look at some best practices you can readily implement to help create a better inventory management process for your dealership.
Invest in Automotive Inventory Management Systems
Inventory Management Systems (IMS) or Dealer Management Systems (DMS) can help you manage your dealership inventory as the technology is designed specifically to automate and streamline many of the tasks associated with inventory management.
DMS technology can help improve the efficiency and productivity at your dealership. Dealers using a DMS for vehicle inventory management tend to see faster turnover and improved revenues which makes a good DMS well worth the investment.
Some of the central benefits of utilizing an IMS or DMS include:
- Real-time inventory tracking: Get up to date information on your dealership’s inventory so you know what you have on your lot and what should be on your lot.
- Sales tracking: In addition to tracking inventory as it comes in and out, you can also use your sales data for analytical purposes by tracking customer preferences and identifying your best selling vehicles. This can help you make data-backed choices on which vehicles are worth adding to your inventory
- Reporting: Many DMSs can generate a variety of reports which can help you identify specific areas for improvement in your inventory. For example, your DMS may produce a report identifying vehicles that have been on your lot for more than a certain amount of days to help you identify slow-moving vehicles. This gives you the opportunity to take action and shift your sales or marketing strategy to help move them off your lot.
- Automation: An inventory management system can be helpful in automating tasks you may have done manually until now. By automating certain tasks, you can reduce the need for manual input, saving man hours and reducing the potential for human error.
In short, a DMS can help improve your bottom line by streamlining dealership processes and by giving you the tools and data you need to make informed decisions about your inventory.
Understand the Cars in Your Inventory and Know How to Track Them
As a dealer, it is important to be able to manage the different kinds of cars in your inventory so you can create the most effective marketing campaigns for each vehicle and increase the likelihood of making a sale.
You may have up to four different categories of vehicles in your inventory:
- New vehicles – vehicles that have never been owned or driven before that typically have a high demand.
- Used vehicles – cars that have been previously owned and driven and still have high value despite some wear a tear.
- Certified pre-owned vehicles – used cars that have been inspected and certified by the manufacturer to meet a certain quality standard before they are resold.
- Trade-ins – cars brought in by customers to cover part of the purchase price of a new or used car.
If you are using an inventory management software, you can enter the specific details of your inventory including status, VIN, make, model, year, mileage, and asking price to help you better manage and track the kind of vehicles in your inventory.
Keep Your Dealer Inventory Fresh and Customer-Appealing
A big part of proper dealership inventory maintenance hinges on following best practices when it comes to keeping your inventory appealing to your shopper base. Keeping your inventory interesting, relevant and well-maintained increases the chance of attracting the right customer and your chances of making a sale. Here are a few of the best practices you can implement at your dealership to help keep your inventory fresh:
Identify and Learn About Your Dealership’s Target Market
A big part of running a successful business is gaining a clear understanding of your target market so you can get a picture of what your dealership’s ideal customer looks like. This will help you determine what price point your shoppers are willing to consider and that will ultimately help you to decide which vehicles to bring on to your lot.
Use Your Dealership’s First-Party Data
Harnessing your first party data can be an absolute game changer when it comes to dealership inventory management. By tracking your inventory levels, sales, customer demographics, website data, and marketing campaign analytics, you can get a clear picture of your customer, their interests, and which vehicles they may prefer. This can help you make informed decisions for your dealership regarding which vehicles to stock.
Diversify and Maintain Your Dealership’s Inventory
Diversifying your inventory by stocking a variety of makes and models will help attract a wider range of customers. Make sure your vehicles are in top condition both inside and out to help them stand out to potential buyers.
Following these best practices can help you keep your shoppers interested and increase your chances of making that sale!
Incorporate VIN-specific Marketing into Your Dealership’s Inventory Management Plan
An important part of dealership inventory management is tracking how much time vehicles are spending on your lot. Almost inevitably, there will be cars that are slower or harder to move and, unfortunately, the longer they sit on your lot, the more they depreciate in value. This means your slow moving VINs might be costing you some serious money.
VIN-level marketing campaigns allow you to create targeted ads for a hyper-specific audience that focus on selling a particular VIN, exponentially increasing the chances of finding an interested buyer and moving that vehicle off your lot.
Incorporating a VIN-level advertising strategy into your marketing can help you move aging inventory off your lot, saving you money all while making room for new vehicles.
How Proper Inventory Management Can Improve Your Dealership’s Bottom Line
Dealership inventory management is an important practice for any dealer looking to build a successful business. By tracking your inventory, understanding what vehicles you have on your lot, you can make smarter business choices and improve your marketing strategy to ultimately improve your bottom line.
Fulpath’s VINs-acceleration solution can greatly benefit every dealership looking to save money and put an end to the lot rot growing in their inventory. Fullpath works to identify and move challenging, aging inventory with AI-powered customer match campaigns created with a designated budget, so you can find the perfect buyer for the slow moving VINs on your lot without draining your marketing budget.
When creating ads powered by Fullpath’s machine learning capabilities, dealerships can move challenging inventory off their lots 60% faster. To learn more about how Fullpath can help you master VIN-level marketing for your dealership, contact us at email@example.com.
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