Cost of holding stock, an issue?

[AlexM 0]

Hi guys,

 

First post here and full disclosure, am not a dealer, but have been looking to dip my toes into creating a software product for dealers. I've been working on the space for 9 months, I have some experience in retail businesses but not the motor trade, so I would really value your thoughts as potential customers down the line - I don't currently have anything to sell.

 

My question is this: I consistently hear about issues with over-stocking and surplus inventory etc. I know that isn't every dealership, especially the smaller and more nimble independents, but I'm wondering how big an issue this really is.

 

If you don't sell a car for 30 (60, 90?) days, do you write off the cost of the time that car has spent sitting on your forecourt? ie depreciation, stock funding costs, forecourt costs etc? Or do you just write it off as a general cost of business? 

 

Other than marking down the car, do you do anything about it? Obviously you try to avoid it, but what do you do with the lemon(s) you can't shift? Straight to auction? Is this a big deal?

 

Thanks guys, really appreciate any thoughts,

 

Cheers

[Earunder 69]

Quite a good question, but there is no correct answer.

Every dealership, small / large, independent / franchised is different and run differently by their goals on how they are driven.

Some prefer to write off the cost as an individual loss while others view it as a profit as they work their expenditure into their monthly budget.

That's about as answerable as can be without divulging business strategies.

[Arfur Dealy 823]

Alex, I received your PM, I’m sure you have blanket sent the same message. I’m afraid my time = money.

 

[BHM 994]

12 minutes ago, Arfur Dealy said:

Alex, I received your PM, I’m sure you have blanket sent the same message. I’m afraid my time = money.

 

Snap! 

All I'll say is it's buying that's a struggle, not overstocking & as for cars that can't shift they get their price slashed which will attract some greedy horrible scumbag.

[Arfur Dealy 823]

5 minutes ago, BHM said:

Snap! 

All I'll say is it's buying that's a struggle, not overstocking & as for cars that can't shift they get their price slashed which will attract some greedy horrible scumbag.

We should charge consultancy fees

[metcars 394]

2 hours ago, Arfur Dealy said:

We should charge consultancy fees

I've mentioned this before. There always seems to be someone touting for free info. I can't think of any professional that I wouldn't expect to have to pay a minimum 1hr consultancy fee?

[BHM 994]

11 hours ago, Arfur Dealy said:

We should charge consultancy fees

 

8 hours ago, met said:

I've mentioned this before. There always seems to be someone touting for free info. I can't think of any professional that I wouldn't expect to have to pay a minimum 1hr consultancy fee?

True & true plus it always seems to be a desk jockey with no experience who feels that they can get to grips with this industry milking us for information with the intention of creating either software or an advertising website that will be the new panacea. 

I love all of these theoreticians, the think every industry can be sorted from a desk space in their bedroom because they have little understanding of the mechanical & human aspects. 

They should get themselves to the block, buy a few shitters, get them sorted, advertise them & then deal with a greedy idiot who values his 03 Fabia p/x at £800 - write me some software for that!

[metcars 394]

1 hour ago, BHM said:

 

True & true plus it always seems to be a desk jockey with no experience who feels that they can get to grips with this industry milking us for information with the intention of creating either software or an advertising website that will be the new panacea. 

I love all of these theoreticians, the think every industry can be sorted from a desk space in their bedroom because they have little understanding of the mechanical & human aspects. 

They should get themselves to the block, buy a few shitters, get them sorted, advertise them & then deal with a greedy idiot who values his 03 Fabia p/x at £800 - write me some software for that!

+1

[It's me 609]

4 hours ago, BHM said:

 

03 Fabia p/x at £800 - 

what colours the fabia ?

[BHM 994]

1 hour ago, s and b said:

what colours the fabia ?

Pink (was red), 9 days MOT, 2 bald tyres, not a scrap of service history, stank of fags, filthy seats & to operate the clutch pedal my left knee was up beside my ear!! QUALITY STOCK!!!!

[Jimbo 11]

5 hours ago, BHM said:

Pink (was red), 9 days MOT, 2 bald tyres, not a scrap of service history, stank of fags, filthy seats & to operate the clutch pedal my left knee was up beside my ear!! QUALITY STOCK!!!!

Give you £950 !!

[c_cars 56]

6 hours ago, BHM said:

Pink (was red), 9 days MOT, 2 bald tyres, not a scrap of service history, stank of fags, filthy seats & to operate the clutch pedal my left knee was up beside my ear!! QUALITY STOCK!!!!

As seen on DA 'good condition for age and miles' 

[Arfur Dealy 823]

It’s rare I scrap, I tell em if your car is less that £500 as a px, it’s not attractive as a PX to retail. I say I can dispose of the car for you and normally work out a deal. I get maybe 5/6 year which are left with me, otherwise I get them to mot their car prior to PX and allow cap average. That way I know I’m not buying a money pit. 

[Cornish Guy 45]

Pink (was red)!

My favourite colour.

British Racing Pink.