A stock car costs €86 per day in the United States!

Reduce Days in Inventory, Increase Profits…

Dealerships and car companies are finally paying more attention to the turnaround time of their used cars. Due to the high interest rates, especially compared to the ultra-low rates of recent years, unsold cars now incur significant costs. Thus, Days in Inventory (DII) has once again become a crucial Key Performance Indicator (KPI) that demands effective management.

Only fish and used cars start to smell after a few days…

It’s commonly believed that a DII of 60 to 90 days is acceptable, and beyond that, it becomes problematic. However, Brian Benstock, a frequent guest at our #DCDW events, holds a different perspective. He contends that only fish and used cars start to smell after a few days. In other words, the optimal window to sell a used car is within seven days of its arrival. This advice applies not only to exotic or special edition cars but also to regular cars like the Volkswagen Polo. After seven days, new Polos are online, competing with those already in the market.

Carmax, a company I’ve mentioned before, maintains an average turnaround time of just 28 days for its 150 stores. However, reducing DII requires a clear vision, streamlined processes, and software solutions. While platforms like INDICATA could be seen as a solution, they are effective only when accompanied by a management process and vision focused on selling used cars within a reasonable timeframe, like 31 days.

According to recent NADA studies, the average cost to an American car dealer for keeping a car in inventory is $86 per day. Yes, you read it right, $86 per day! While this figure might be lower in the Netherlands, even halving it means that every car on an expensive parking or display spot costs you at least €35 per day. If such a car stays on average for 80 days instead of the intended 30, it translates to a significant cost difference of €1,500 per car. If you have 100 cars in inventory, the potential risk becomes evident. And let’s be honest, who includes the real holding costs in their transaction overview?

Sell Faster

Selling faster means selling more. It might involve lower margins, but the bottom line in the annual financial statement, which is the ultimate goal, will be significantly positive. Therefore, during the initial 30 days, aim to generate as much traffic and Vehicle Detail Page (VDP) views for your inventory as possible. Forget about the number of leads; focus on VDP views—they are paramount. Don’t hesitate to invest in day, week, or homepage toppers, and consider allocating more marketing budget in the early days rather than resorting to discounts after 60 days. This initial investment may seem substantial but is only a fraction compared to the cost of discounting inventory!

Money Incurs Costs Again!

Perhaps it’s a blessing that money has value again and, consequently, comes with costs. This implies that wasting days in inventory by not listing cars online, delaying online listings, or not prioritizing turnaround time also incurs a monetary loss. If a customer is considering a Polo that has been on the lot for two days and you have a similar Polo that has been there for 80 days, and you fail to provide a comparative quote for both cars, allowing the customer to make an informed choice, then the blame for extended turnaround times rests with you. And yes, it won’t work without marketing. In fact, cutting marketing expenses will not solve the problem of increasing turnaround times; investing more in marketing, such as on platforms like Marktplaats, will!