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Gotta Stay Fresh

There are many thought processes when pricing inventory; some are often reactionary when a vehicle ages instead of being proactive when a vehicle is fresh. Most people agree that the time to make money is the first 30 days of acquiring a vehicle. When looking at the majority of dealers' inventory by age bucket, after 30 days, there is little to no profit left after 30 days, especially if a dealer needs to acquire vehicles at auction to maintain the inventory levels to achieve the objectives.

What we see many dealers do is start out on day one near 100% to market, sometimes more and sometimes less, quite often determined by the market day supply. However, how many take into account multiple factors that are very relevant to pricing a vehicle to increase the odds a vehicle sells in the first 30 days? What if the day supply is higher than usual, or the vehicles being compared have been online for sale for longer, and some are priced thousands over the average retail price? A recent metric shared this past week is that 34% of the vehicles online today are over 90 days old! When pricing against these vehicles, wouldn't it make more sense to review where vehicles are priced when leaving the market than compared to a large amount of inventory that has been sitting? Pricing similar to those aged vehicles that have been on the market for some time will nearly always ensure a vehicle ages.

Market data is a great tool but not an exact science. In Lotwalk, we use data that shows YOUR experience with exact vehicles or similar vehicles to give you a predictable time to sell based on YOUR data. The dealer down the street may be creating that day supply on their core product, but that does not mean that a Honda dealership would have the same success with a Ford product as they would with a Honda.

Before putting a vehicle out there for consumers to view, ensure the competitive set makes sense and the price is closer to where vehicles transact. In a depreciating market, reviewing your inventory daily identifies not only those vehicles that are getting online activity but also what is generating leads. Question and review those vehicles not getting activity by day 20, and review online descriptions, pictures, and pricing daily. As vehicles come in and out of the market daily, where they were priced a few days ago, they may no longer be competitive in a matter of days. When vehicles are not generating leads, is that vehicle being put on the specials page on the website? Has someone done a walk-around video and shared it on social media? Is the vehicle parked where it can be seen by those wandering the lot? Is the desk aware of these vehicles when desking deals? Are customers in your CRM potentially interested in a vehicle that is not generating leads? (Something Lotwalk can provide).

Managing inventory should be a daily activity, not a couple of times a week. Everything should be reviewed on day one, and a vehicle is in inventory throughout the entire time. Always question what made a vehicle sell fast and why another made it 30 days without interest. If a vehicle has many leads, why has it not been sold? There are three reasons a vehicle does not sell: it is not desirable, the price, or the process. The question, "Which is it?" should be asked on every unit DAILY.

Happy Selling!

-John Ruswick

Performance Engineer

Lotpop Inc.



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