There is a particular combination of age, mileage, and monthly payment that all have to work together to get the customer to sign and the lender to buy.
The Special Finance Quick Start e-book recommends that you have a steady stream of cars that meet these parameters:
- Current year plus last seven years
- Prices in the $7,000-$19,000 wholesale range
- Minimum of $500 under NADA value
- Low mileage, preferably under 75,000 miles
The more established your dealership, the more likely you are to recognize the makes and models that fit both the demographics of your customers and the lending requirements of your banks. As is recommended with your lending portfolio, it is important to look and determine your most successful efforts. In this case, what are your highest grossing sales? What cars did they involve?
However, developing your list of cars with the highest grossing sales is only part of the battle. Just like with hiring employees, some candidates look better on paper. Therefore, inventory turns and vehicle book values must be closely monitored. Marketing pricing and appraisal tools can be leveraged to find, acquire, and price the best vehicles to increase turn and improve profitability.
The right inventory for your dealership varies according to your local customer’s needs; which are influenced by the economy, fuel prices, area’s infrastructure, technology, individual’s personal image, current events and more. The most successful dealerships realize that their inventory evolves with their customer. With the right balance of trial and measurement, your dealership will thrive.
Are you using marketing pricing and appraisal tools to select your inventory?