How Can Car Dealers Improve Their Stock Turn To Increase Profitability?
20th October 2023
One of the ways car dealers can maximise their profit potential is by paying attention to their stock turn, which is why it’s vital for dealerships to understand what their stock turn is and learn how to make improvements as this can definitely financially benefit the business.
What Does ‘Stock Turn’ Mean?
Stock turn for car dealers is an indication of how often your business can sell its vehicles across the year. If you can sell vehicles quickly, you won’t need to invest as much money into your stock, leading to higher profits. This is why concentrating on your stock turn could have a positive effect on the company, as you’ll be aware of how long your stock is taking to sell, which can also lead to better buying decisions.
There is a quick and simple calculation that car dealers can use to discover their stock turn:
How Can Dealers Improve Their Stock Turn Ratio?
There are obvious ways to make improvements to your stock turn ratio, such as by simply selling more cars without increasing your stock, or by decreasing your stock holding. These are quick fixes however and car dealers would benefit more from simply knowing when the right time is to take action if it’s not selling.
Car dealers typically aim for a stock age policy of 60-90 days, turning over their stock every 45 days to total at least 8 stock turns a year. Used car stock vehicles that aren’t selling within 90 days could be better off being sold back to trade or auctioned, so that you can replace them with cars more likely to sell and yield a profit. Paying constant close attention to this also means you are better equipped to make the right stock buying decisions as the market changes.
Keeping an eye on industry trends could help you to avoid bringing in vehicles that might struggle to sell, with various factors to consider, including the time of year for some cars. Analysing what is and isn’t selling in the motor trade also means that you can purchase vehicles that you know are in demand and are more likely to be sold quickly.
Car dealers have instant access to key vehicle metrics, including stock age information, with the DragonDMS dealer management system, so it’s easier than ever to monitor your stock turn and make any changes to help improve your profits. Speak to our team today to find out how your dealership can gain a better insight into your product planning and stock control with our car dealer software.
Dragon2000 have been helping dealers and garages drive their businesses forward since 1995. Contact our sales team today by calling 01327 222 333 or emailing email@example.com to find out how our dealer management system, car dealer websites and mobile apps can help your business increase profits and reduce costs.