The Speed of Inventory & The Speed of Your Traffic

There isn’t a shadow of a doubt that the automotive market is coming back quickly for all franchises in almost all markets. The trend that I see happening in dealerships from the East Coast out to West Texas is pretty amazing over the last couple of weeks. Stores that are rolling and have solid momentum are turning their new and preowned inventory faster and faster. This excessive turn rate is allowing them to get into and out of their preowned inventory faster and for the prices they need and want. Their grosses are climbing and they are finding the bottom of the market when buying cars from auctions. As this cycle continues to repeat itself each week, these stores are building momentum and starting to pull pieces of market share away from their competition.

I sat with a General Manager of one of the highest volume used car dealerships I have ever seen and we were talking about the price points of pre-owned Toyota Camrys. We were setting our prices for our memorial day sales event and were chuckling that these Camrys were dropping like rocks at auctions and he was now buying 2011’s around $14k. Just as we were in the discussion – a trailer load of them rolled by the front of the showroom.

When we were setting the prices and talking about his stores success over the last couple weeks and months, it dawned on me that his excessive inventory turn was helping to increase his traffic. Not through any means of advertising but from good old organic and online presence – he was seeing more traffic because cars were here today and gone tomorrow. The comment of “I can’t even get them reconditioned, detailed and on the website and the poof they are sold, let alone go in and have all the sold units from that day removed” was proof that if you are going to live in excess – living in inventory excess is the address to have right now.

Don’t get me wrong – it has taken years of powerful promotions to achieve the equity that this dealership has built up – but now it is reaping the benefit of a monster inventory and a lightening fast turn rate on both new and used cars.