From the Road – Inventory Control

It seems that when I am traveling long distances, my thought processes seem to be at their very best.  Maybe it is just that, given the same-ness of the Interstate system, my mind has nothing better to do.

Recently, I found myself driving home ahead of the rapidly advancing effects of Winter Storm Q.  TV and Internet reports were showing local drivers bedeviled by ice and massive amounts of snow.  Progress was, in our case, unimpeded and, in fact, accompanied by partly sunny skies and dry roads.

The key to this “luck” was my navigator sitting by my side checking maps and reports on a weather channel using the latest product from iPad.  We could tell where the weather was, where it is was going and what we had to do in terms of route and timing to avoid any storms.

Now you are, I can imagine, wondering just where this version of “storm chasers” is going and why in the heck you should read any further.  The above paragraph can be summarized in a very short sound byte, “The Wonder of Software and Technology.”

One of the areas where dealers tend to bog down, in their drive to Special Finance success, is in having a sure plan for inventory control.  There appears, on many occasions, to be a serious disconnect between the driver (manager/buyer), the passengers (prospective customers) and the road map or inventory plan.  Many times, in these past couple weeks, I have heard the same old lament from Special Finance professionals across the Midwest; “I could double my deliveries if only I had the proper inventory!”  And from Used Car Managers, I hear, “How the heck can I know which vehicles to keep on the lot?”

In all fairness, the used car market over these past couple years has not made Inventory Control a walk in the park.

But I am going to offer a simple, but significant approach that may help to increase the number of your approvals which actually get delivered.  And the best part is that this plan utilizes the information that you already have available.

Like the iPad that I used to avoid delays and mishaps, you all have some sort of desking and/or reporting software that you are or should be using on a day-to-day basis.  From these programs you should be able to simply determine what percentage of your actual deals are funded by each of your lenders.  That percentage will help you determine what percentage of your inventory should be made up of vehicles that meet those lender’s criteria!

Let’s, just for simplicity sake, assume that 33% of your deals fund through CAC, 25% through Chase Custom and 25% through Capital One and the rest through Santander companies.  Please do not read anything into these percentages, they are simply hypothetical.

It only follows, then, that 30 – 40% of your inventory should fit into CAC criteria. And 25-30% should be Chase or Cap One cars.  You know which cars will fit which lenders!  Why would you, in the above model, fill your lot with Chase cars and try to operate with a handful of cars that would fit a CAC deal?  But a surprisingly large number of people don’t take the time to think through this scenario.

It is a simple plan, and is not a panacea for all inventory problems, but I guarantee you that this simple change in thinking/planning will result in more deliveries and more money in your pockets.

Just my two cents worth!

 

About the author
Dick Hassberger, of Lake Orion, Michigan is a veteran of over 50 years in the Automotive Financing and Leasing industry, starting his career with the former Wayne Oakland Bank in September 1960.  Dick is National Sales Director for VOISYS.  He has held executive positions with Major Banks, Lending Institutions and Leasing companies and has accumulated a vast store of knowledge in the automotive financing industry, which he regularly shares with his client dealerships as well as readers of this blog.  Dick was a regular author for World of Special Finance Magazine.