BHPH Inventory Requires More Effort Than Ever

Remember the old saying, “It’s easier to get iron than customers.” Since 2008, that has changed and now the challenge is to find the right inventory without paying completely out of the book for a decent vehicle. We only need about 30 vehicles a month. That still has us watching three auctions each week and dealing with several wholesalers to acquire what we need.

A person on LinkedIn posted a poll recently about unusual places everyone is finding inventory. Most of the answers are the obvious: wholesalers, individuals, other dealers, auctions, OVE, AutoTrader and so on. We bought a truck the other day from a radio program in our local market called “Dial a Trade” where people call in buying or selling all types of items (dogs, boats, chickens, guns, etc.). I also have a weekly call-in radio program called “Nuts and Bolts.” I take calls about cars, financing, politics and local events. This past week I had a woman call me and ask if I would consider buying her car. She liked our program and wanted someone who “needed a great car” to have hers. I went and got it from her the next day.
 
In buy here pay here or dealer-controlled financing, your inventory is almost as important as watching your underwriting and collections every day is. What we could buy for the money three years ago is gone. Today, there are fewer cars to pick from with twice as many people buying them. What is available has become less desirable. In our operation, we have a complete reconditioning program to make sure the vehicles we sell stay rolling as long as possible.

To get the models we want in stock we pay more and have bought some rougher rigs than we are used to. We have always had to be diligent in our buying and now that is even more important. Our ACV hasn’t changed but the year models we can buy have regressed three years for the same money. I keep waiting for the prices to fall back in line. Dropping values will hurt our portfolio and possibly increase insurance losses and recovery dollars. I do believe we should see wholesale prices start downward during this year. Special financing has come back to life and new car sales are improving which will help the supply of trades. You combine that with a continuing weak economy and prices will move lower.

We as owners and managers have a lot of responsibilities in the day-to-day operations of our stores. Times like these just intensify the importance of being diligent in all aspects of your business. Your inventory is one of the most critical components of your business model. It plays a huge role in profits and losses. In our model, the inventory is our best advertising. The rigs out front literally pick the customers we get the opportunity to work with. Make every purchase count.