Used Vehicle Pop Quiz: Why Is One Dealer Doing So Much Worse?

January 6, 2017

Take a moment to review the following used vehicle inventory-level metrics from two similarly sized and geographically located dealer groups. Then, I’d welcome your answer to the quiz question below.

Inventory Market Days Supply

Dealer group 1: 85
Dealer group 2: 73

Cost To Market

Dealer group 1: 90 percent
Dealer group 2: 84 percent

Price To Market

Dealer group 1: 94 percent
Dealer group 2: 95 percent

Inventory Age

Dealer group 1: 40 percent under 30 days; 33 percent over 60 days
Dealer group 2: 65 percent under 30 days; 7 percent over 60 days

Annualized Inventory Turn

Dealer group 1: 7x
Dealer group 2: 14x

It should be clear from these metrics that Dealer Group 2 is doing a better job selling more cars and making more money on a per-car basis.

The question: Given the information here, what would you suspect as the root cause of Dealer Group’s 1 less-than-optimal performance?

Please share your answer in the comments below. I look forward to a lively discussion and sharing the right answer in an upcoming post. Thank you for your participation!