• Spyne
  • Posts
  • Secret to Reducing Inventory Holding Costs 💸

Secret to Reducing Inventory Holding Costs 💸

Minimizing inventory holding costs, tweet of the week, and what's trending in the automotive world

Author

Shobhit Dixit
March 03, 2025

Did you know, the average inventory holding costs for used car dealers in the US is around $84 per car, as per CBT News. The average car stays on your lot for 63 days before sale (data by Investopedia). Each day it does, it also prevents you from purchasing and selling a new model, by keeping your capital and inventory space tied up.

For every day a car stays unsold on the lot, the average US dealership loses around $330 to financing costs and depreciation. For a 100-car inventory, that’s a whopping $33,000.💰💰💰

So, how can you reduce your dealership’s inventory holding costs (and inventory holding period)? In this newsletter, we’ll tell you how!

To reduce your holding cost, you’ll need to optimize your operations and reduce delays wherever possible. For easier understanding, let’s break it down into two parts - optimizing inventory and optimizing sales.

Optimizing Inventory

Going back to the basics with this one; prioritize high-demand/faster moving vehicles for your inventory. Then, accurately assess the reconditioning required and the associated costs.

Vehicle Acquisition

🔹 Prioritize high-demand models using AI analytics (CDK Vehicle Inventory Suite, VinSolutions, Impel, etc.) to stock fast-moving models.

🔹 Partner with aftersales service providers in your serviceable area to offer aftersales incentives (free car washes, maintenance discounts, cashback) to boost trade-ins.

🔹 Use tools (vAuto's Stockwave, VETTX, etc.) to search for auctions, marketplaces, or private sellers with the best models and/or deals on offer.

Inspection and Reconditioning

🔹 Use AI-powered inspection tools (e.g., UVEye, Ravin AI, etc.) to assess vehicle condition, detect damages, and estimate repair costs.

🔹 Get accurate condition reports to determine purchase and reconditioning costs, then set a profitable selling price.

🔹 If you’re a small dealer who can’t justify spending big bucks, explore affordable AI inspection integrations (e.g. Tchek, Focalx) via your DMS partner.

Market-based Pricing

🔹 Leverage AI-powered data insights from your inventory management partner/DMS to accurately price your vehicles based on the market.

🔹 Use dynamic pricing tools (e.g., vAuto or Price Lab) to adjust pricing in real-time based on market fluctuations.

Optimizing Sales

Now, it’s time to clear out the inventory! Maximize your sales potential with the right mix of digital and traditional. Let’s see how.

Digital Listing and Marketing

✅ List your cars on multiple platforms to maximize visibility. If you don’t already use multiple platforms, pick free or affordable ones like Facebook Marketplace, Autotrader.

✅ Use high-quality, accurate images and videos (e.g. using Spyne) for your car listings.

✅ Use compelling first images with discount details (if applicable) on your listings to grab buyer attention.

✅ Lead-capture forms aren’t enough! Use AI chatbots (Fullpath, Gubagoo) that can engage with shoppers 24×7 and schedule test drives, showroom visits, or call with sales representatives.

✅ Use AI-driven CRM tools (e.g., VinSolutions) to identify high-intent buyers and follow up with them appropriately.

❌ Avoid costly ad experiments on Google/Facebook unless you have prior experience with paid advertising.

Sales and Turnover Monitoring

🔹 Monitor days-in-inventory via your DMS

🔹 Discount slow-moving stock before depreciation reduces profitability.

🔹 Organize clearance sales or "last chance" offers, and promote them via email, social media, and your dealership website

🔹 Bundle aftermarket incentives (similar to trade-in deals) to increase attractiveness and conversion rates.

Inventory Replenishment

Now, start over and make more money!

The dealerships that thrive in today’s market are the ones that embrace technology, flexibility, and proactive inventory management. The question is—are you ready to take your dealership to the next level?

Tweet of the week