For auto dealers looking to improve turn rates and reduce aging inventory, Rick Case Automotive Group offers a proven strategy: prioritize units that have been sitting on the lot for more than 120 days. It’s a non-negotiable sales directive, says Tim Hlavenka, the group’s national sales director, who ensures his team actively pushes these older vehicles with aggressive pricing and focused attention. That kind of disciplined inventory management approach has helped the Sunrise, FL-based group “tremendously” improve its aged car inventory in the last year, Hlavenka tells WardsAuto.

“We have truly focused on reducing our aging (inventory) and have been very consistent in sending out reports and reminders on this,” he says.

Aged inventory is not only expensive for a dealership to carry, but it also indicates the dealership isn’t stocking the vehicles its customers are seeking. That can lead to lower customer satisfaction and lost sales.

Fortunately, the right strategy and various software tools can help dealers manage inventory, save money and retain customers.

The Case Group has a corporate inventory manager who sends a twice-monthly report highlighting any new vehicles over 120 days old and used over 60 days old.

Hlavenka then sends an email to staff emphasizing the importance of keeping aged vehicle inventory to a minimum. He also reminds them that “all aged vehicles should be clean, upfront, or in the showroom ready for delivery,” Hlavenka says.  

The group has also improved its ability to order the right vehicles, “ensuring we only take what is necessary and what sells!” Hlavenka says.

Managing inventory well sells more vehicles. CDK, a leading provider of integrated technology solutions, consistently reports in its monthly Ease of Purchase Scorecard. If shoppers are forced to visit other dealerships to find their desired vehicle, dealers lose the sale.

“When you have that good salesperson, and you have that car in stock, (customers) are not going to go to another dealership,” David Thomas, director of content marketing at CDK Global, tells WardsAuto.

Avoid Flooring Expense

Aged new vehicle inventory is expensive to carry. In the past, due to lower interest rates, a floorplan could be a profit center for a dealer. With today’s high interest rates, it can turn into an expense.

That means dealers need to pay as much attention to aging new inventory as they do to used inventory, Patrick Janes, AVP of inventory solutions at vAuto, tells WardsAuto.

While new vehicles may not depreciate like used, “when you add in daily floor plan expense, you are still paying to keep that (new) car on your lot,” he says.

vAuto has long tracked used vehicle metrics to help dealers manage used inventory. It realized the same metrics could be used to manage new inventory, as well, Janes says.

The company’s Conquest product tracks incentives in real time to allow dealers to price cars according to the margins they can tolerate and to put incentives on specific models, Janes says.

“Along the way, we help them determine what part of their inventory is aging out,” he says.

Dealerships can also use Conquest to put aging rules on new vehicles, specifying when the margin structure on a vehicle should be changed, essentially when they should start discounting.

Walking the Lot

Pricing and merchandising are the factors that “really drive traffic,” Nathan Shaver, dealer principal of Shaver Chrysler Dodge Jeep Ram in Thousand Oaks, CA, tells WardsAuto.

He’s very proud of his aged inventory management because in March, when Shaver talked with Wards, he had zero cars on curtailment, meaning the dealership has not paid its floorplan lender to buy more time to sell a vehicle.

He recommends having aged inventory on the front line of a dealership and analyzing why those vehicles aren’t selling. 

“You (must) walk the lot once a week –or a sales manager does –and they need to identify ‘Why is this car not selling? Is there damage? Is it not priced right? Is there something wrong with the description online?’ I spiff on those cars,” Shaver says, of paying special incentives to salespeople who move them.

Shaver, who says he “geeks out” on inventory management, is searching for a less than 30-day turn on used inventory. 

He recently talked with a representative of Lotpop, whose LotWalk platform draws on various dealership software such as a document management system (DMS)or customer relationship management platform and gives each vehicle a score.

It also creates a virtual lot showing lead data on each vehicle. The lot can be digitally “walked.”

It spurred Shaver to think entirely differently about managing used inventory, he says.

Rather than discounting a vehicle after it has been on the lot for a certain number of days, Shaver now has his salespeople review the leads on aged vehicles.

Before dropping the price, they pinpoint when they stop following up on leads.

“Where did we leave off on the last sales proposal when a customer came in and negotiated on this car?” his team is now asking. “Can I pick up the phone and can I make that deal?”

Any day with fewer than five sales, he expects his top salespeople to be calling those leads, particularly on aged inventory, Shaver says.