Since 2020, vehicle sales in the U.S. have been on a wild ride. First, people scooped up used cars to maintain social distancing. Then, it was all about new cars until chip shortages and supply-chain delays forced more consumers into used vehicles. High gas prices due to inflation, coupled with increasingly severe threats of climate change, have yet again flipped the switch on vehicle buying habits with more consumers looking for alternatives (motorcycles, hybrids, electric vehicles) than ever before.
Experts expect the situation to drag on as supply-chain challenges continue. Charlie Chesbrough, Cox Automotive senior economist, said “Production and inventory are stuck in low gear, far below historical levels, with no end in sight.” As a dealer or finance company, managing your inventory and assets has never been more important. We’ll help you understand what’s happening and how managing inventory with a GPS system can help you gain more insight and better control your balance sheet.
Where Inventory is Lowest
According to Cox Automotive, low prices drive inventory down. Here’s a quick breakdown of days’ supply by price point:
- <$10,000: 30+ days
- $15,000–25,000: 40+ days
- $25,000–35,000: 50+ days
- >$35,000: 60+ days
If you sell vehicles on the lower end of the price spectrum, you’ve likely felt this inventory crunch firsthand. While selling cars within 30 days can help with inventory depreciation and carrying costs, it also means you’ve got to better manage the inventory you do have. You can’t risk losing any inventory to theft or extreme weather. A GPS-powered lot-inventory-management system can help you deter theft and protect your inventory efficiently and effectively.
Low Supply and High Demand Mean Higher Prices
Low supply and high demand mean prices are rising, especially for used vehicles. Consumer sentiment is at a 40-year low, yet demand for used vehicles continues to rise. In the second quarter, used vehicles accounted for almost 62% of all car loans, up almost 4% year over year. At the same time, used-car buyers are borrowing more with the average used-vehicle loan skyrocketing 18.7% to $28,534.
Even if your revenue is up, your profits might be down to higher wholesale prices. Dealers are paying 6.6% more at auction in 2022 than 2021 according to the Manheim Used Vehicle Value Index. Because you have less wiggle room on your balance sheet, you need to ensure that the inventory you do have is protected. A GPS vehicle-tracking system can help you minimize risks with features like geofencing, tamper and theft-detection features and automated alerts.
Protecting Your Inventory on the Lot
Whenever supply goes down and demand goes up, you can bet thieves are on the prowl. With a lot-based GPS-inventory-management system, you can have more peace of mind knowing you can locate your assets in real time. Look for systems that offer GPS geofencing with automated alerts. Opt for a system that uses dual-location tracking nationwide that combines both GPS and Cloud Location over Cellular (C-LoC) technology so you can find assets in parking garages or other areas GPS can’t reach if assets go missing.
Keeping Tabs on Financed Vehicles Post-Sale
Having lower inventory on your lot means you likely have a greater number of vehicles on the street. As such, it’s imperative that you track your assets, especially with vehicle-finance fraud on the rise. A GPS management system can help you track your assets once they leave the lot. Read this post to learn the seven reasons why every dealership needs a vehicle-inventory-management system. If you’re worried about how an inventory-management system will affect your balance sheet, consider a hard-wired solution or a quick-install, wire-free, battery-powered system.
With the right system, managing inventory becomes a breeze. You can not only track assets in real time, you can also enhance your cash flow through improved customer communications, automated collection technology and enhanced service.
Turn to PassTime
With more than 25 years of experience, PassTime is your go-to GPS inventory-management partner. Our suite of GPS solutions ensures that you have the right system for your inventory needs at the right price. Our track record of reliability, service and technological innovation speaks for itself. We’re a true partner you can count on to help you not only manage and protect your inventory but also grow your business.
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