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

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

DealersEdge Headlines

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.

Historically, the used vehicle market takes a turn for the worse in September and October as the factories introduce their new models. That could be exacerbated this year as the effects of a one-time event, the Japanese earthquake and tsunami, are mitigated. As demand shifts toward new cars, dealers who don’t plan now could be faced with inventory write-downs. So Jeff Sacks suggests that car dealers “anticipate the anticipators” and begin trimming used vehicle inventories now. What’s a good target number? Jeff suggests 30 days-sales on the lot. That’s a very aggressive target, but even if you can’t quite get there, beginning the effort now will save a lot of money a few months from now.