Efficient stock control is paramount to retain chassis profit. Having the right amount, mix and ability to prepare used cars for resale quickly is imperative for dealers.
Stock Turnover Ratio
You can tell a great deal about the dealer’s operational performance by looking at their stock turnover ratio, i.e. the amount of times per year that the same money is used to buy another car.
Stock Turnover Ratio = Cost of Goods Sold / Average Inventory
As a KPI, you’re looking to have a high stock turnover ratio. Chris Roberts, the Managing Director at Thurlby Motors says that dealers should be able to turn their stock at least 8 times a year. In other words, to achieve a stock turnover of 8 you would have to sell 8,000 cars over the year, with a clear target sale of 660 cars per month.
Effective stock turnover happens when purchasing and sales department work in tune with each other. In essence, sales have to match inventory purchases to avoid holding costs and maximize profits on each car.
“You have a window of 30 days where you stand a chance of maximizing the price” said Simon Palmer, the Sales Director of Hendy Group that manage 25 used car dealerships across the south coast of England. Given that timeframe, the speed of getting a car ready for resale is of upmost importance.
No stock should exceed the 90 days period and that begins the moment the hammer goes down at the auction. The longer it takes for a car to reach the forecourt, the lower the return on its investment.
Effective Management of the Preparation Process
How long does it take to prepare a car for resale? How long does each step of the process take? How long before you know, how many cars you have at each step of the process? How much does keeping a car in the preparation process cost your business a day? How much less is that car worth everyday you have not sold it?
Access to instant updates on the car’s progress can help managers to answer the questions above, identify areas for improvement and decrease inefficiency.
Reducing days in prep with Buzz2Get
Our software brings data entry automation to dealerships. It’s a highly time and cost effective tool that helps to reduce time inefficiencies and therefore speed up he car’s journey through the preparation process.
An automatically generated QR code for each car registration is stuck to the car windscreen on arrival. Once scanned by the prep staff using a smartphone, the code opens up an automated checklist that records the car’s prep progress. At the back of that, a dashboard with real-time data and KPIs is available to managers instantly.
By removing the human intervention with a simple QR code for data entry, dealerships are able to significantly reduce the number of days in preparation centres. Our tools and clear to read analytics make it possible to achieve results overnight.
We are looking for dealerships with their own preparation centre that are keen to automate their current processes, reduce their time inefficiencies and therefore enable effective stock control.
For more details please contact Chris Scoot.