Good inventory management is vital for the success of car dealerships. Car dealerships are all about supply and demand. Having a clear, simple and structured stock management system allows you to efficiently meet customer demands and maximise sales.
Here we look at the benefits of inventory management for car dealers, the options for stock management, what digital inventory management software can do, and suggest a few best practices to help you get the most from your software.
For car dealers, a solid inventory management system will save you time by giving you quick access to comprehensive details for your whole inventory. You’ll be able to get an overview of your stock, even across multiple sites.
Having this information at your fingertips means you can easily find vehicles based on customer requirements and specifications – and/or help your customers find the right vehicles when your stock inventory is linked digitally with your sales website.
With a good stock inventory management system, you can view how many vehicles are in each stage of the supply chain and track progress. You can be alerted to low stock, fast sales, popular vehicles and more from the wealth of data that’s trackable with a digital inventory management system.
By closely monitoring inventory and turnover rates, dealerships can minimise the holding costs associated with keeping vehicles in stock for extended periods. This includes expenses such as: storage fees, depreciation, insurance and financing costs.
Prudent inventory management allows cash that would be tied up in excess inventory to be freed up. Vehicles sold more quickly means reducing holding costs and improving cash flow, which can then be reinvested back into other areas of the business.
Vehicles can depreciate rapidly, particularly with technological advances. Effective inventory management helps dealerships minimise the risk of holding on to outdated inventory by monitoring ageing stock and implementing strategies to sell or discount older models before they lose significant value.
Accurate historical sales data and market trends result in improved forecasting accuracy and an ability to make more informed decisions about which vehicles to stock and in what quantities, reducing the likelihood of overstocking or understocking.
Car dealers have the option of manually or digitally managing their inventory. However, fully manual inventory management and tracking is time consuming and highly inefficient. Following the pandemic, most car dealers use a digital inventory management system – specifically a cloud inventory management system.
Smaller and independent car dealerships with a smaller stock will tend to use a manual inventory management system due to cost constraints, simplicity or a lack of technological expertise. Larger dealerships usually have the means to invest in more sophisticated inventory management software.
Digital inventory management software makes it easy to log vehicles into your system. Car dealers are able to log vehicles and update vehicle statuses by desktop, laptop, tablet or phone – software depending.
A detailed account of the vehicle can be added, from registration number and age to number of owners and images of damage or marks. And all of this information can be viewed at a glance in a digestible format.
Digital software offers you access to a wealth of data based on your inventory, which you can use for internal business planning purposes. This data is unique to your inventory and can give you a better insight into what is working and what isn’t.
Digital inventory management software can track your inventory by status – bought at auction, in stock, sold, delivered, etc. It can alert you to low stock or out of stock as sales go through. You can easily see where you have vehicles that aren’t selling or which haven’t sold for a long time, and you can judge when to offload.
A digital inventory tracking system can be linked with your website, enabling you to give customers the power to refine searches of vehicles to whatever factors are important to them – rather than limiting them to preset categorisation. For example, they can search by a year range or number of owners, not just make and colour.
It is worth noting that while linking your dealership website or app to an inventory management system is very much possible, it can vary in complexity. This depends on various factors, including the capabilities of the inventory management system you choose, the features desired for your website or app and the level of integration required.
There are many vehicle stock management software options on the market. Your personal preferences may skew you to choose one over another.
We frequently see car dealers choosing DealTrak. A platform specifically created for automotive dealers, it has a good reputation and has been utilised for a very long time.
Apak, a wholesale finance system, is another popular platform. With this one, car dealers can plug in their own stock, etc, alongside 3rd parties, such as Autotrader.
Summarised in three simple points, car dealers should follow these best practices when using inventory management software:
LE Capital can help you buy stock to meet demand, streamlining the purchase process when buying at auction by liaising directly with the auction house.
