Used Car Days' Supply and Aging: The 30/60 Rule
A franchised dealership should carry about 30 days' supply of used vehicles and hold no used units over 60 days (Pocket20 benchmarks). Every day past that adds floor plan interest and depreciation. That eats into the front gross the unit will eventually bring, and it ties up cash that could be buying fresher, faster-selling cars.
The formulas
Used days' supply = used units in stock ÷ average used units retailed per day
To get average units per day, take used units retailed over the last 30 days (or the year-to-date average month) and divide by 30.
Aged share = used units over 60 days ÷ total used units in stock
The statement prints units in stock. Aging buckets usually come from the inventory report, though some statements print them too.
Benchmarks
Used days' supply (franchised): about 30 days
Used units over 60 days: none
Reconditioning turnaround: about 3 days
Used-to-new retail ratio: 1.25 to 1 or better
Used front gross per unit: $1,528 or better; best-in-class about $3,000
Independent dealers, rural stores and suburban stores are held to different days' supply targets because their markets turn differently.
Example (hypothetical round numbers): 150 used units in stock and 100 retailed over the last 30 days is 3.3 a day, or 45 days' supply. Getting to 30 days at the same sales pace means carrying about 100 units, which frees the cash and floor plan on 50 cars.
Why the used-to-new ratio matters
When a store retails fewer than 1.25 used units for every new one, its used department is usually under-developed. Trade-ins go to auction instead of the front line, and the reconditioning gross that service and parts would have earned goes with them.
Related
See it on your own statement
Pocket20 reads used units in stock, days' supply and front gross from your statement and shows what the gaps are worth. Get a free read or see a sample read.