Thoughts On Business: Sales Opportunities #3

I was looking out on the lot of the commercial upfitted inventory at the dealership we are currently working with and an interesting thought came up. The thought is this: when all you have is old inventory, it makes it ever harder and more challenging to move them as time passes and inventory depth shrinks.

We inherited a large number of '07 model units and even one '06 model--all new, but very old. Some were over 1,000 days old. When we took over, all there was on the lot was old stuff. It is increasingly difficult to move the old stuff if that is all there is. Here's why: there is nothing to compare it to in order to create value.

One value of an '07 let's say is that it can be a bargain. A bargain compared to what? Everything is relative. Well, for sure, it is a bargain compared to an '09 model. Yet, if I don't have any '09 models to show, there are no opportunities to demonstrate the value and why it is a bargain.

Reducing inventories in slower times is a common strategic cost-saving move, but it can also be a cost-increasing move. Most would not recognize this based on what I see in the marketplace (lowering inventories, no new units, etc.).

Look at this another way. When the fast moving, popular pieces are gone (and you know they are the first to go . . .), all you have left are the rest. Making profits has everything to do with making sales and when you lower your inventory so much that you have none of the best moving units, you can and should expect profits to tumble. I suggest that you keep the good moving units coming while doing everything you can to move the old units too. Stopping the good units and keeping only the bad is a terrible strategy.

So, let me offer a specific example. When we took over this operation, there was not one 8' service body on a single rear wheel chassis. This is THE most popular unit in all my experience. And, wouldn't you know it, our first real prospect was someone who wanted an 8' service body on an extended cab. Luckily, he was willing to wait a week and a half to get one, so we made that sale. Our second sale was an extended cab 8' service body. We now have several extended cab service bodies on the lot, don't you know. At the same time, we have moved a good number of older pieces and I believe that it has more to do with the fresh items on our lot than any one other thing.

If you're committed to the commercial truck market, I highly recommend that you do not let your inventory get so stale that stale is all there is. Fresh units, especially faster moving and unique units (another article or two) will help you continue to earn profits to help compensate for the additional flooring the old units are using.