When it comes to year end best practices in the used truck department, most dealers are primarily focused on the write down process and the associated tax implications. We agree that that’s important, but here are three crucial areas that should not go unmanaged while prepping for year end.
1.
Take a physical inventory
Cycle counts are a regular occurrence in the parts department but confirming your truck inventory and condition unfortunately doesn’t happen with the same regularity. Your first step towards preparing for a new year in the used truck department is printing the inventory from your business system and checking that information against what’s on your lot. For each truck, confirm that the inventory is in the system and has the correct location, components and condition noted.
It sounds obvious but even smaller dealerships tend to be surprised how often used trucks “get legs” and disappear or suffer from “lot rot” to the point that they can’t be driven.
2.
Reassess your investment
Your investment needs to be considered in two different directions, and we’ll cover them both here. First, take a look at your trucks on an individual basis and compare how many dollars you have in the unit against what the market is likely to pay for it. If you’re invested way above market value you have two options: 1) write the unit down to put yourself back in line, or 2) liquidate and get as much money back as you can to reinvest in other areas. Second, think about how many dollars you have sitting on the lot compared to your sales. We recommend that your dealership turns used truck inventory four times every year.
Does your investment match your capacity? If you divide your annualized sales by your total investment can you see “4” from there? Is it your inventory position or sales capacity that needs to change?
3.
Know the role of used trucks
The end of the year is always a good opportunity to rethink how your used truck department is fulfilling its role in your dealership. As a business owner the first instinct is often to go straight to the bottom line when assessing performance, and that’s never a bad place to start.
With used trucks, however, that rarely tells the whole story. What role does the used truck department play in your dealership? Is their primary mission to support the new truck and lease department in getting deals? Is the primary mission to generate parts and service business and after sales opportunities for those departments? Is the primary mission to generate a profit on the sale of used equipment? With that role in mind, did they get the job done this year and are they in a position to improve that performance next year?
If you don’t have a primary mission for the used truck department, can you really be surprised or upset at the results?
There are lots of moving parts in your dealership, keeping an eye on them all is the defining challenge of leaders in this business. When it comes to used trucks, we know where your eyes need to be and what you need to be looking for. Whether your issue is tactical or strategic, we can help!
Now is the time to get started! If I can assist you with your Used Truck department, please reach out directly to me via email at
bennett@keaadvisors.com.
Please join us for a FREE webinar this Friday to learn more about the steps you should be taking for your end of year prep in your
Used Truck department.
