You should all know these essential metrics by now, but here’s a reminder. Do you actively keep track of them?
- Market Days’ Supply - Calculated by dividing your currently available stock, by the average number of sales per day over the previous 45 days. Ideally, these are grouped by make, model, trim, and registration year.
This equation can be linked to where you want your average stock age to be. For example, if you want your average stock age to be 45 days, you may target to have between 80 and 90 Market Days’ Supply.
- Price To Market – Think of this as a sliding scale of vehicle price. In the first 1-30 days aim to market at 103% market rate. This gives you room to negotiate, and you could be lucky with a potential buyer seeing a new car hit the market.
31-60 slides down to roughly 98%; this gives you the best chance to sell as you’re now below the competition.
61-90 days without being sold and you should think about dropping it to around 95%.
- Per unit ROI – To get this metric you need to divide the net deal profit by the total cost of sale, then multiply that by 360 and divide by the number of days to sell. This will give you an annualised ROI. You need to aim for 100% ROI, and this will make you keep an eye on the importance of gross margin and how quickly the car is sold.
- Days in inventory – This measures the number of days a vehicle is in your inventory for, higher days across the overall stock means an increased chance of wholesale loss or diminishing profitability. Aim to keep at least 55% of your retail inventory to an age less than 30 days.