The person managing the dealership’s used equipment must understand the local and national markets. They need to see trendlines develop and react to what they see proactively, not reactively. 

They need to control the movement of machines from the sales mix to the used equipment and to the washout cycle. What needs to happen to the machines, and what can be influenced throughout the process? 

“Used equipment has many moving parts…”

They will need to understand how to use data to drive the decision-making process, and management needs to trust the data they are presented. Used equipment has many moving parts and they are easily seen and monitored if the used inventory managers are left alone to look, listen and make a decision. 

Used Equipment Manager vs. Remarketing Manager 

There is no right or wrong answer as to whether a used equipment manager or a remarketing manager is the right fit for your dealership, but it’s important to understand the two roles are different. You need to understand the needs of your dealership and the strengths and weaknesses of the person managing used inventory.

Used Equipment Manager 

  • Looks at the macro as much as micro. 
  • Guided by the sales mix, used equipment turn and washout cycle.  
  • Understands the ebbs and flow of the inventory.
  • Follows retail, wholesale and auction trendlines. 
  • Data is their friend. They will understand what is happening and why. 
  • They will understand customer buying habits. 
  • They have no emotion, and data is the guiding light. 
  • They take the “Money Ball “ approach to inventory management.

Remarketing Manager 

  • The remarketing manager’s essential function is getting used equipment ready to sell.
  • Has strong working relationships with independent wholesalers, inline and non-inline dealer and jockeys. 
  • Transactional selling beast. The remarketing manager should be in the top 5 in volume and margin of all sales reps in the dealership. 
  • Focused on getting machines ready to sell and selling them. 
  • Locate machines not in inventory for sales reps.

Understand Your Sales Mix: Be Proactive Not Reactive

  • How many dollars of “new” equipment were sold? 
  • How many dollars of “used” equipment were sold?
  • What is the new to used ratio?
  • What is the effect on used equipment inventory?
  • How many dollars are coming into inventory and how many dollars are going out?
  • Know if you have oversold new to use in your sales area and make adjustments now, not later.  

Know the Used Equipment Inventory Turn At All Times

  • It is directly affected by sales mix
  • Know used turn by machine segment.
  • What turns fast and what turns slow?
  • What can be influenced and what does that influence look like?
  • Can’t be too fast. 
  • Houses the dealership’s cash.
  • Faster turns equal more available cash.

Used Inventory Days in Inventory 

  • What is the current days in inventory by segment? 
    • What is in inventory and how long has it been there?
  • What is the 2- and 5-year average days in inventory of sold machine? 
  • Beware of the 9 month rule.
  • This is a direct correlation to used equipment turn.

Next moth we’ll tackle the washout cycle, evaluation processes, used equipment pricing and margin expectations.