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What Can Auto Dealers Do During World Crises? (Part 3)

¿Qué hacen los concesionarios en tiempos de crisis?

Here is the third part of our list of reports a good DMS should provide to help dealers in times of crisis.

In difficult times like these, it is vital for companies to center their efforts on three main imperatives:

  • Focus on current customers
  • Mind costs
  • Improve productivity and efficiency

These can be translated into five specific objectives the dealer can work on:

  1. Retain customers
  2. Purchase parts intelligently
  3. Detect unsold parts and vehicles
  4. Increase service efficiency
  5. Evaluate the dealership performance in detail

A good DMS (Dealer Manager System) is vital to providing the dealer with specific information in order to work on these goals.

In our first issue we focused on the importance of reports that help dealers retain and make sales to current customers through diverse marketing tools. In our second issue we focused on reports that help dealers purchase parts intelligently, saving time, as you avoid managing parts manually, and making informed decisions on your inventory.

Now we’ll focus on detecting unsold parts and vehicles.

Goal 3: Detect unsold parts and vehicles

Parts with low activity – How to identify and sell them

Benefits for the dealer:

  • Identify parts without sales
  • Create an action plan to dispose of inventory
  • Reduce costs

Unsold parts suffer from diverse hidden costs, such as insurance, warehouse rental for storage (even if the dealer owns the warehouse, the rental cost has to be considered) and wasted man-hours on inventory recount and processing.

Parts without sales are equivalent to money that is stored on your shelf and that is not generating profit. In other words, the dealer has to consider the opportunity cost.

A dealer is very likely to have many thousands of dollars in unsold parts.

The first step to avoid this situation is to classify parts according to their activity. Depending on sales, a part can be classified as High, Medium or Low. A good DMS creates this classification automatically and in real time, according to specific criteria established by the Parts Analyst.

A DMS should also provide a report that shows parts classified into these categories. The Parts Analyst can then easily identify those parts with low activity or without sales.

After identifying these parts, you can create a strategic action plan to dispose of them. For example, you can contact clients who have already bought these parts in the past, create them promotions, offer discounts and more.

Vehicles in stock – How to identify and sell them

Benefits for the dealer:

  • Identify vehicles that have been in stock for a long time
  • Create an action plan to dispose of inventory
  • Reduce costs

New or used vehicles without sales imply insurance, storage and other costs, as well as a decrease in value with the passing of time and the opportunity cost of investing money in other business initiatives.

As for used vehicles, for example, the dealer can receive a trade-in at a low price, but if the vehicle remains at the dealership for more time than the expected, the transaction may no longer be profitable.

A Vehicle Time in Stock report will help the Sales Manager detect these vehicles in order to set policies to offer slow to sell units to potential clients.

Continued in the next issue…

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