08 Oct Reduce this trend of increasing obsolescence
We’ve noticed a definite trend of increasing obsolescence across the industry. While the average for non-manufacturer guaranteed obsolescence has hovered around 10-12%, it’s currently more like 13-20%. We took a closer look to shed light on the cause and identify potential solutions. What we found is surprising.
Quite a few manufacturers offer automatic replenishment programs specifically designed to eliminate obsolescence at the dealership. Interestingly enough, as you’ll see in the table below, the manufacturers with the highest obsolescence are also manufacturers with Automatic Replenishment Programs.
What can you do to reduce this trend of increasing obsolescence?
1) For those of you that are now getting warranty retail, take some of that markup you’re now getting and add it to an accrual account specifically designed to throw your obsolescence away. Before throwing obsolescence away, if you can, we recommend trying to sell it through a parts broker.
2) If you’re in a Dealer Group, try trading obsolescence amongst each other. What isn’t selling at Dealership A could be selling at Dealership B. We do this for our Dealer Group clients all the time!
3) We also recommend reporting and viewing your non-guaranteed and guaranteed inventory separately. That way, you can closely monitor what’s going on and make the necessary changes to your inventory management process before it starts slowing down your operation.