Technology Tells Dealers Which Cars Are Hot

by Mary Wisniewski

Knowing what is trendy is a skill fashionistas possess. Dealers, however, need a little nudge. To help, inventory management systems are serving as their stylists, ensuring the hottest vehicles are on dealers’ lots, set at the right prices. And as financing dries up and the recession blossoms, the technology is gaining traction. “Given the big adjustment with the market, dealers are painfully aware that they need something,” says David Nelson, senior vice president and general manager for FirstLook’s Elite Ops Division, a company that offers such technology.

FirstLook views its products less as inventory management systems and more as retail solutions. Consider its product, Retail Performance System. In addition to inventory management, the tool handles processes like appraising, pricing, merchandising, stocking and Internet advertising. The products emphasize best practices in a repeatable, fast way, reinforcing “everything they learned in used cars 101,” says Nelson. “Some dealers suffer from delusions they were doing it all along.”

Todd Crabtree of Houston, Texas-based Jeff Hass Mazda has used FirstLook “forever” and is very pleased with the company’s products.

The Bob Baker Auto Group in Southern California chooses to use AAX and vAuto at some of its shops to manage inventory. “I look at it as a return in an investment,” says Mike Baker, chief executive officer. “It’s not an expense as much as an investment.”

Baker notes the technology is only worthwhile if dealers understand the intricacies of the system, and encourages them to use the tool. He adds that without it, purchasing decisions are simply fly-by-night.

“There are deficiencies within the system,” Baker says. For example, the technology doesn’t account for a sudden major drop in gas prices, which means dealers boast extra economical cars on their lots. DealerTrack, which offers dealers AAX, PriceDriver and InventoryPro for their inventory management needs, says the technology’s popularity is growing. “We are seeing more interest with dealers managing their pre-inventory,” Tim Zierdan, vice president of inventory management solutions at DealerTrack, says. “Our technologies start to help. We help make them make better buying decisions.”

Lafayette Ford uses AAX, for one. The Fayetteville, N.C.-based dealership has used the product for the past three years and is very pleased with the technology. AAX is very “complete, user-friendly, and effective,” says pre-owned sales manager Johnny Godwin.

The dealership also uses the tool for appraisal, which is Godwin’s favorite feature. AAX allows the dealer to enter a VIN number to see its market value from Manheim’s auction prices or Kelley Blue Book, for example. “It gives a wide view of what is going on with a car that particular day,” says Godwin.

VinSolutions is the inventory management tool Springfield, Penn.-based Rothrock Chevrolet Lotus opts to use. “I like [the system] because it is userfriendly,” says Andre Johnson, general manager.

Dealers are also getting new options as players such as Mirror the Market Inventories enters the market.

The Web-based inventory management system includes features like comparing the dealer’s sales to actual registration data for its market. This data can be compared using zip codes, counties or a mileage radius from the dealership. This, in turn, lets the dealer see what the hottest vehicles being registered by make, series, model and mileage are.

Another feature the system boasts is an ordering tool, which makes recommendations to dealers about what vehicles to buy based on previous sales. “I have never seen anything like what I’m experiencing today,” says Tim Monaghan, president. “It’s never been more important for dealers to control inventories because they are an acute expense. The more inventory a dealer has on his lot, the more he will spend on his floorplan interest.”

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