Some Inventory Solutions - Engine Mix

It has been my experience in the last number of years that the supply has exceeded the demand for diesel trucks. This is one of the reasons that there is a glut of old inventory: 95% of them are diesel. It's time to change and stop doing the same thing over and over again--stocking the same bodies on the same chassis year after year. As the market goes back to normal in the next number of months, plan to make different decisions on your stocking and I predict that you will have a good deal more success and less flooring costs.

It has been my experience and that of others that the market in round numbers is about 50% gas and 50% diesel. I like diesel, but I would stock about 65% gas and 35% diesel now and in the near future. I know a lot of dealers are dropping their overall inventory levels due to very slow sales, and what is happening is they are losing sales because they are not replacing units that do sell. Do what you can about that, but make a decision to change your approach from here on and it will serve you well. Even if you stocked 50/50 you would make a lot more sales.

Back in the early 1970's when I first started selling trucks, diesel fuel was about 25% less cost than regular gas. Now diesel fuel is between 35 and 60% more than gas. The fuel economy of the diesel is not good enough to make up this difference. The only real advantage left is that there is more power generated per mile per gallon. That advantage is only used under certain circumstances. Bottom line: gas is the winner overall. If diesel ever goes back to being substantially less than gas, this may change the percentage, but it will never be what I have seen many dealers doing by stocking 80-90% diesel. That doesn't reflect the marketplace at all.

With the addition of the new emission systems for diesels the maintenance costs have risen sharply. Diesels were always higher cost in maintenance and now it become much harder to justify owning a diesel except for certain companies and situations. These are things that can very easily be pointed out to customers so they can see what their costs will be.

Last item is reliability. One of the great selling features in the past was the longer life of the diesel motor. GM and Ford have been playing around with diesels since the 1980's with very mixed results. This makes the reliability and longevity seriously in question. Having a 100,000 mile warranty doesn't help much. Another good reason to change your mix.

The bottom line is selling more trucks and having happy customers. One way to do this better is to change the mix of engines to favor the gas. The demand for diesel will be there for a long time, but the demand generally doesn't exceed 50%. Don't forget to calculate the flooring cost savings as profit.

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