With the growing awareness of increased margin compression, many dealers believe they can simply sell more cars and make up the difference through increased volume. This may have worked in the past, but times have changed. Combatting margin compression will require a variety of different tactics.
One effective way to combat margin compression is by improving your time-to-line, that is, the time it takes to get used vehicles you have acquired ready and on the lot for sales.
In this video, which features my conversation with RapidRecon Owner Dennis McGinn and Vehicle Acquisition Network Founder Tom Gregg, we discuss the significance that your time-to-line has on your bottom line.
Enjoy the Video
The significance is that there are a lot of ripple effects in a dealership’s time-to-line process. The average holding cost can range from $40 to $85 a day depending on who you ask. No matter how you look at it, this number is eating at your gross.
We also know that 21 days is the magic number. If you don’t have a buyer after 21 days from when you first acquire the car, then you’re going to start taking a hit on that car. When you calculate the value of this on an annual basis over just a couple hundred cars, the dollars begin to add up significantly.
In summary, time-to-line can eat at your profits and there’s always room for improvement. You improve this by having a workflow built into your process to avoid bottlenecks, with built-in accountability that helps ensure that cars are getting out the door swiftly, and thus preserving your margins.
For access to the complete conversation, follow this link.
Author: Ryan Gerardi
Ryan Gerardi LinkedIn is Producer and Host of the AutoConverse Future Mobility & Connectivity Podcast a show dedicated to exploring people, ideas, and technologies related to how we are connected and how we get around. Ryan began working in the automotive industry in 2001, establishing his roots in online vehicle merchandising before expanding into digital marketing and now rich media for Automotive B2B. You can keep up with Ryan at http://www.blogproautomotive.com/