Moshe Schoopachevich had his work cut out for him in early 2014. His dealer group, Reedman-Toll Auto Group, had just expanded to 10 dealerships across seven locations, and the director of used-car operations was charged with integrating the used-car operations of the newly acquired stores. While the task represented an opportunity to improve the group’s inventory processes, there were challenges along the way.
The issues Schoopachevich faced were common to small to midsize dealer groups that have inventory mixtures as complicated as those of big, publicly traded groups but without their vast resources. Individual rooftops within the group, for example, didn’t always communicate well. At Reedman-Toll, a vehicle that might have sold at one store was sometimes stranded for months losing value at another because the rooftops worked autonomously. Additionally, used-car managers often relied too heavily on instincts and habits.
“I had cars with birthdays,” says Schoopachevich. “They’d been here for 360 days or more and they had no value,” because the managers thought they would sell eventually and didn’t closely monitor how much they cost to keep around. Inventory management tools can help, but they require buy-in from employees. They also need to be used correctly, which some managers were resistant to do.
Being quicker or more precise than modern tools is impossible, Schoopachevich adds. “But managers still wanted to do things their way.”
Schoopachevich is correct about modern software tools, says Jeremy Alicandri, managing director at the Stamford, Conn.-based consulting firm Maryann Keller & Associates. “The latest tools can analyze various datasets about market supply and demand,” he says. “They also provide suggested pricing and predicted time to sell at the VIN level — within $500 accuracy for pricing and five days for selling.”
Though he does not endorse specific tools, Alicandri says today’s inventory tools deliver more accurate appraisals that are often better received by customers — many of whom are doing loads of research. Still, data-driven tools are only tools, he adds. Stores need to see tangible benefits from these solutions and have a strategy to adopt them.
Sharing inventory, centralizing appraisals, taking trades at one location to be sold at another? “This is a great concept, but it’s hard to execute,” Alicandri says. “Each store is focused on its profitability. Unless one store benefits from buying inventory for another store, this won’t occur.”
Today, the average selling time for a vehicle at Reedman-Toll is 25 days. Ninety-day-old vehicles are rare, and Reedman-Toll’s flagship store in Langhorne, Pa., consistently sells around 300 used vehicles a month, up from 185 in 2014. Schoopachevich credits a series of steps for this — primarily harnessing the data but also taking a broader view of the store’s processes. Making this transition to inventory management across an entire group, he adds, requires adhering to some distinct, data-informed strategies.