Do profit margins really matter?

May 9, 2008

Of course they do. As long as you have a good profit margin on a unit that will sell in your location.

I had a great conversation with Dale last week. This is the meat ‘n’ potatoes of what we discussed.

“What is the days supply in your location?” This is the NEW first question you should ask yourself when deciding what to stock. Not “how cheap can I buy it?” If you make a poor decision and purchase a unit with a high days supply, your retail asking price may quickly turn back to a wholesale or worse.

I live in Georgia. In the winter time, our hardware stores and other retail stores don’t stock snowshoes. We don’t get more than a couple of snow days a year around here. No matter what the price, they probably wouldn’t sell (unless they get so cheap that I buy them all and ship them up north). Either way, it’s not a local retail.

You can’t rely solely on your store’s sales history. The market changes daily and it’s tough to follow (gas prices, economy . . etc). You can’t hope that just because you bought it cheap that it’ll sell. Interest and advertising can quickly take a unit from black to red. By compiling live internet data, Dale’s new Stocking Tool is the only thing I’ve seen that gives us the current information needed to make an intelligent purchase.

vAuto is the only proactive solution I’ve seen. The others just react to the market.

Thank you for giving this market some perspective Dale!

Colin Blackledge – Milton Martin Toyota