Is Your Floorplan Ready for Summer?

In case you haven’t been following along over the course of the last 5 years or so, tax season isn’t so much of a season anymore. It is more like a one month shot in the arm and rarely much of a boost in the books—let alone one that lasts the rest of the year. So, how does this potentially impact your floorplan and your overall cash flow as you head into the summer season? Let’s look at a couple of items that can help you move in the right direction.

• • Firstly, have you recently evaluated your inventory? If not, it is time to. You must make sure that you have reviewed aging vehicles, looked at the number of vehicles on your lot, and made sure the front line is ready. Here are a few tips to add to your playbook:
    If you have inventory that hasn’t moved, it’s time to let those go. Either get them to the auction or find another dealer that you can wholesale them to. Aging vehicles cost money and is a waste of space on the lot. Remember, that one space needs to turn four to six times annually.
  • Do you have the same number of units on your lot now as you did in February for your tax sale? If so, knocking that number down by 10% may be a good idea to put some capital back into the business. Unless you own all of your inventory, this will cost you in the long run. Whether it is additional curtailments that require more cash outlay or interest on the units, time is money.
  • Do you have cars that have been at repair shops for too long? Now is the time to buckle down and get them repaired or sold back through the auction. Sitting on units in the summer that are not ready to sell when sales are slow is not a good investment. If you have capital invested in these cars, you can also free that up when resell occurs.

Another thing to do during the middle of the year is evaluate your finances. During slow times, it is good to review your income statement and balance sheet to make informed business decisions on expenses and projections for the remainder of the year. This will help ensure that you have a profitable 2018.