Many OEMs have shuttered production during the pandemic. Even as the economy comes back online, assembly lines will still see bottlenecks related to a lack of key components from overseas suppliers. And with an uncertain future, dealers have also committed to large scale cancellations of future orders.
Many dealers came into this pandemic with very low unit turn ratios. Continued sales during partial closures could help to right-size inventories and get them back to reasonable levels (if your turn ratio is less than 3, then you are stocking too much or selling too little).
But what if this blows over quicker than expected, where does the stock come from?
– Refocus on purchasing used
– Purchasing distressed stock from failing or failed dealers
– Place new orders with suppliers
Or maybe, look at reducing future sales while holding higher margins???
Now is the time to start thinking about what you will do differently once business returns to the “new” normal. This pandemic could ultimately turn into an opportunity for many dealers, a chance to build a new business that’s sustainable over the long term, one with less risk.
What key lesson have you learned?
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