Video Blog/Jeff Sacks: Now is the Time to Trim Used Vehicle Inventory

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Dealers may be riding the used car wave today, but there is a hard landing waiting just ahead.

In his latest DealersEdge Video Blog, dealership management expert Jeff Sacks engages in a little trend spotting. As he travels the country, Jeff reports that he sees an alarming number of franchised car dealers with aged used vehicles on their lots in the 70- to 80-day range and older. That may not be a problem today since retail used car prices seem firm, but there could be trouble on the horizon.

Video Blog/Jeff Sacks: As Sales Show Improvement Now is Time to Tune Up Your Customer Retention Process

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Managing Your Interest Costs

For many years, dealers have had the luxury of operating in a low interest environment. Optimization of cash flow was left to those dealers who were either under-capitalized (and had no option), or well-versed and disciplined in asset and cash management techniques, thus taking advantage of optimizing their cash flow and relentlessly reducing their borrowings.

But, as interest rates rise, the cost of not aggressively managing your assets increases. There are a number of asset management strategies that dealers need to consider in order to free up cash flow and use this new found cash flow to offset their higher interest burden.

Treat Each Day Like it is the Last Day of the Month

Whether you want to admit it or not, there is way too much “fat” surrounding the way you finalize transactions at the retail level. Blame it on complacency or tradition, i.e.,  “this is the way we have always done it,” but in the end it really hurts dealership performance in the areas of cash flow, asset management, management information and ultimately dealership profitability (the quicker you accelerate cash flow, the quicker you pay off floor plan and reduce this expense).