How many times has a vehicle been stolen off your lot? How long did it take you to notice it was gone? Days, weeks, months?
Less egregious, but potentially just as damaging, have any of your porters slapped a dealer plate on a vehicle and used it for their own or a friend's personal use?
No, I'm not making this up. Sadly, I continue to see these types of issues plague dealers. I know of one dealer who had 15 vehicles stolen — and they had been missing for months before the thefts were discovered.
Predictably, the insurance carrier slowed the claims process because the stolen vehicles were not reported to them and the police in a timely manner.
The dealer subsequently learned one of his employees was using at least one vehicle for his own use. As for the others — well, it's anybody's guess.
In many dealerships, it is fairly easy to make a vehicle go missing because there is a lack of inventory control. Just look at the typical delivery process.
Often, when vehicles are delivered, dealership staff (usually the porter) writes down the information (VIN, color, make, mileage, etc.) onto a notepad, and then compares it to the manufacturer stocking order. The porter then fills out, by hand, stocking tags and key tags.
The office staff, when they get around to it, puts the information into the dealer-management system. It's a recipe for potential fraud, not to mention simple human error.
The tracking process often is just as bad, and can take days to correct or rationalize inventory. Your employees have better things to do with their time than walking up and down aisles of vehicles trying to correct inventory issues.
Believe it or not, dealerships often do not keep track of test drives their sales people do, nor which area of the lot the vehicle is returned to following a test drive.
All too common are customers waiting as sales people run around trying to find a vehicle that's not where it should be.
Car keys often are hanging on a board or in a key container somewhere with little oversight into who grabs them. Too often, there really is not much that keeps someone from taking a car, putting on dealer plates and selling it. And it's months before the dealership realizes the vehicle is gone.
Another issue is who performs the physical inventory. Usually it's the porter or people who work for the new- and used-vehicle departments.
Accounting will tell you they don't have the time or the manpower to do it. So we have a loss of internal control through the infrequency of doing the physicals and we have the wrong folks assigned to the task.
If what I've described sounds like your dealership, it may be time to consider using inventory scanning. Most DMS vendors offer such a function, as do a couple of independent vendors whose products integrate with the DMS.
An employee uses a handheld gun to scan a vehicle's VIN. The scan is uploaded to the DMS. Better systems will provide assorted vehicle data while integrating it with accounting and service in the DMS.
The dealership also can print labels with bar codes and smaller labels to affix to the keys, deal jacket and the vehicle. Also important is the ability to designate a spot or location for the vehicle.
Some dealers say using a computerized solution reduces the time it takes to do a physical inventory and reconciliation by as much as 75%. What typically might take three days now be done in three hours.
These solutions also simplify the process of delegating the scanning function to a person outside of the new-and used-vehicle departments.
Dealers also track whether vehicle locations have changed indicating whether vehicles are being marketed and test-driven.
For example, if a vehicle was scanned two weeks in a row and has not moved, that might be an issue to take up with the sales manager.
The system thwarts inside fraud and theft schemes. At the very least you will be more on top of your inventory.
Certified Public Accountant Wayne Fortier is a dealership consultant with Dixon Hughes PLLC. He is at 919-876-4546.