curated by Larry Chiang
The silent dealership margin killer? Inventory aging, of course.
The average car sits on a dealer lot 45 days before being shuffled off to another store, according to vAuto.
The hope?
Maybe it finds a better fit in a different market.
But here’s the catch—once transferred, that same unit typically sits another 30 days before selling.
On paper, it looks like the car sold on time.
In reality, it’s been dragging on the balance sheet for 75 days—eroding gross and tying up capital.
That’s why placement matters.
1) Getting the car to the right store day one
2) Or, making the move before the clock runs out.
Wait too long — and you’re bleeding margin you’ll never get back.
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Data via vAuto, check out their guide on centralized inventory management here → carguymedia.com/4pM5xu2 | @vAutoInc Partner
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– Dealerships often transfer unsold cars after 45 days to other stores, masking true inventory age and extending total hold time to 75 days, which hides margin erosion from prolonged capital tie-up.
– This hidden aging increases costs like floor plan interest and vehicle depreciation, with used-car industry averages showing 39-49 days’ supply, reducing profitability in competitive markets.
– Centralized inventory tools, like those from vAuto, enable better initial placement and quick transfers to optimize turnover and preserve gross margins in multi-store operations.<- Track total inventory age across all locations by implementing a centralized system to monitor hold times from acquisition, transferring unsold vehicles only after evaluating true market demand to prevent extending average days to 75 or more.
– Calculate and minimize hidden costs from aging inventory by regularly auditing floor plan interest and depreciation expenses, targeting an industry-standard supply of 39-49 days to boost profitability in competitive environments.
– Adopt centralized inventory management software such as vAuto to optimize vehicle placement from the start, enabling faster transfers and turnover while maintaining higher gross margins in multi-location setups.
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