You could sell 100 units with an average of $2,000 gross profit, or sell 65 units at an average of $3,100 gross profit. Either way, you make $200,000 for the month. So, which do we choose? Which is the better fit for my organization?
The constraints and circumstances that have given us the for's and against's to make the decision have changed. The way our customers buy cars has changed. Social proof and influence have added their dynamic. No longer does one need to go without the other.
In the past with my Dealership in England, if I wanted to sell more cars I would need to up my marketing budget. I would need to cast my net further and try to entice customers to travel further to buy a car. I would need to lower my profits and up my expenses.
Counter this today with online sales being more and more the cultural norm for buyers, I can sell further afield and deliver my car to customers I never had access to previously.
Also impacting my enhanced ability today is the technology that helps me turn my inventory faster without the need to drop my price. Valuation tools that tell me which vehicles will turn quickly and what I need to buy them for to compete in my market and make my target profit.
I used to turn my inventory and capital 6 times a year - now the best dealers who really focus, discipline, and use technology to help them set in stone and stick to process are turning 12-15 times a year!!! What a HUGE difference that would have made for me.
Recon software that not only helps me to get my inventory front line ready quicker but also helps me sell it before it's even ready for sale?
Current Condition reports that help me show transparency, generating trust so that I can compete with the bigger digital retailers.
Bottom line. I can now hit my target 30-day turn ratio for my inventory and I can still gross strong profit.
NADA Academy students showed an average turn of 7.6 times per year or every 45 days across the USA. Successful NADA 20 Group members turned their inventory 12 times a year, or every 30 days. These figures were agnostic to volume or gross stores. The difference in the faster turning stores was the focus, discipline, and measurable, scalable buying, and reconditioning process.
So how do we do that? How do we eliminate inefficiencies? Identify and fix roadblocks? How do I buy better? How do I lower and control my cost in recon?
How do I get my turn down from 45 days to 30? Take 30 seconds to click here to see how much more money your store would make if you focus on the right areas with the help of my friends over at Carketa.
A Dealership selling 75 vehicles with $2500 gross per unit, 7.6 times a year earns $1,4m. By focusing on the right areas and turning 12 times a year the same dealership earns $2.25m.