Used vehicles inventory turns (aged vehicles) vs gross - which is more important?

John Skelton
In today’s dealerships lets address used vehicles inventory turns (aged vehicles) vs gross - which is more important?
Jim Bell
I posted a blog on this again. Pricing your vehicles at a competitive price will help the turn and then help the total store gross and bottom line go up. Here is the scenario that I laid out before. Units in Stock 75 Average Age in Inventory 50 Average Turn 7.30 Annual Unit Sales (Units in Stock x Turn) 548 Current Front GPU $2,200 Total Front Gross(GPU x Units Sold) $1,204,500 Current F&I GPU $500 Total F&I Gross (GPU x Units Sold) $273,750 Fixed Ops (70/30) GPU $300 Total Fixed Ops Gross (GPU x Units Sold) $164,250 Total Gross Generated by Used Vehicle Operations $1,642,500 Now, if you carry the same inventory and bring your front gross down to $1400 and your average days in inventory down to 30 days, that will bring the bottom line to $2,007,000, a net gain of $365,000 with the same amount of vehicles in inventory. Units in Stock 75 Average Age in Inventory 30 Average Turn 12.17 Annual Unit Sales (Units in Stock x Turn) 913 Current Front GPU $1,400 Total Front Gross(GPU x Units Sold) $1,277,500 Current F&I GPU $500 Total F&I Gross (GPU x Units Sold) $456,250 Fixed Ops (70/30) GPU $300 Total Fixed Ops Gross (GPU x Units Sold) $273,750 Total Gross Generated by Used Vehicle Operations $2,007,500 The numbers say it all.
Jim Bell
Just noticed a typo...I posted a blog on this a few weeks ago is what I meant to type.
John Skelton
Jim, how are you measuring "average age in inventory" on wholesale units purchased at auction, at time of purchase or ......?
Jim Bell
Everything is based on when it hits our DMS which is generally the day we acquire them whether it is at the auction or trade-ins.
John Skelton
Jim, When your dealership purchases from auctions ..do they avoid long distance buys do to losing aging days?

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