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Manufacturer Inventory Problems Can Reap Huge Benefits!

From time to time, the manufacturer finds itself with an inventory problem.

SThat is to say, they have too many of one model, or too many with a specific engine or color, or a host of other specifics. Often this occurs when a fleet order is cancelled after production has already commenced, or simply, there was over-anticipated demand for a model, and now the manufacturer is stuck with the problem of unloading these vehicles. We all know what can ultimately happen to these vehicles; every dealer in the territory, zone or region will be forced to take a certain number of them. Dealers will argue that they shouldn't have to take any, or should only have to take a limited number of them, or they already have several in stock that aren't selling. Regardless of their specific case, it is written into their dealer agreements that they will get whatever the manufacturer tells them. I am not suggesting that the manufacturer is a bully who is going to saddle you with tons of "poor" inventory, however, as we all know, in the end, manufacturers aren't going to keep them, so someone will have to take them.

This can prove to be an incredible opportunity for a savvy dealer who can utilize their strength in the market to not only come up with a great promotion, but to help their manufacturer out of a problem.

I was in this exact position as a dealer at one point, and here's what transpired: The region's allocation of a specific model/engine/color combination was inadvertently high, leaving the Regional Sales Manager with 50 cars all equipped exactly the same in the same color, that none of the twenty-two dealers in the region wanted. As dealers we could all see this brewing as time went on, and in June of that year we knew that there would be a huge �suggestion� from the region for each to take a few. Now, to give you a little more information, of the twenty-two dealers' inventories there were probably only five or six of this exact model in stock, of which I already had three. There was a newly redesigned model coming the next model year so many dealers, including myself, had kept their inventory of that model very low in anticipation of the new one. On May first of that year, a huge cash rebate was offered on that model, as typically happens towards the end of a model year with a vehicle that is not moving, and it was also announced that the new model year model was going to be released late, not until October. This left me, and every other dealer in the region, in a position where we would have virtually no stock of that model for months. As expected, the regional manager sent out a fax to each dealer informing them of the additional stock issue and asked everyone to take 2. Surprisingly no one wanted any, giving me a huge opportunity. I called the regional manager and invited him to come and meet with me. I had, in the meantime, decided that if I could get a few "perks" from the manufacturer I would take all fifty. When he arrived in my office, I immediately stated that if I could get 50 spoilers for $50 less than normal dealer cost, I would buy fifty spoilers and all fifty remaining cars. Naturally, he sprung into action, calling the National Parts Manager, and it came back to me within the hour; I could buy all the spoilers at the lowest accessory volume order price that had been offered that year, which actually meant I got them for $55 below the cost of a singly ordered one. With fifty cars, all the same, arriving at the dealership, I had the spoilers painted in advance of their arrival, which meant that the spoilers could be installed during PDI. This also meant I had a particular model of vehicle that no other dealer in the country had, which I assigned the very original "Limited Edition" name to.

Ultimately, with a ridiculously long sale name, offering this limited edition at a discounted sale price, and with newsprint and radio alone, we delivered twelve on the first day and moved all fifty within 2 weeks. In fact, other dealers in the region were telling their own customers that they couldn't get any of that model and they would have to go to our dealership. These fifty sales were all in addition to our regular sales, as this was a model that we wouldn't have otherwise had many, if any, in stock. Not only did we have an incredible sale but the residual effects of the sale were unbelievable as well. The manufacturer looked at us as the one who stepped up and solved their problem, the regional manager was happy as he appeared to his manufacturer to be the one who orchestrated this great solution, our service department was provided with fifty additional PDIs that included additional labor for the installation of the spoiler, our parts department�s overall accessory sales skyrocketed above our targets, earning our parts manager a trip as well as enough to tip the scales enough for our manufacturer�s regional parts manager to also win his trip. Many of our competitive dealers� customers simply abandoned their dealer for sales and service and came to us, assuming that we were some kind of higher tiered dealer, and we could offer more than their previous dealer. Obviously, fifty additional vehicle sales resulted in additional front-end gross, as well as additional gross in our Financial Services Office and a showroom full of pumped-up salespeople. In addition to all of these bonuses, customers continued to arrive at the dealership for months afterwards looking for that particular model, allowing us to present other vehicles, and ultimately sell more vehicles.

So, as you can see, something as simple and frequently occurring as a manufacturer needing some help ultimately took our dealership to a new level of sales as well as winning the favor of our manufacturer for years to come. There is only one problem with this scenario - the manufacturer doesn't have problems every month!

Good luck and good selling!