Inventory Management Tools Drive a Successful Used Vehicle Strategy

Inventory Management Tools Drive a Successful Used Vehicle Strategy

With a strategic focus on inventory management, San Leandro Honda delicately balances acquiring new stock with managing existing used inventory.

It truly must be fate in action when a chance encounter sets a thriving career in motion.

Back in the early days of his career, Jose Mendoza was simply looking for an office job at a local car dealership. During his interview process with the dealership’s general manager, their general sales manager actually convinced Mendoza to the sales side of the business with an odd persuasion method.

“He yelled at me!” Mendoza exclaimed. “He yelled that I should sell cars instead of work in the office. I didn’t think it was for me, but he talked me into it, and I have been doing it ever since.”

Throughout the years Mendoza has climbed the ladder and is now the general manager of San Leandro Honda in San Leandro, California. The dealership, which is nestled in the Northern California area, flanked by San Jose to the south, San Francisco across the bay and Oakland next door, serves a broad spectrum of customers, Mendoza says.

The diverse customer base grapples with many challenges, including rising inflation, a significant hurdle for those already facing economic hardships.

“It has people from lower to upper middle-class households, and large blue collar and immigrant portions near us,” Mendoza says. “The lower middle class and immigrants have a harder time keeping up as they are already a step behind.”

The onset of COVID-19 also brought unprecedented changes, especially in managing their used vehicle inventory. With new car availability fluctuating, alongside soaring prices and variable auction rates, the dealership has had to constantly adapt its strategies. This ever-evolving landscape has necessitated not only a keen eye on market trends but also clear and effective communication with clients about these ongoing changes.

“Used vehicles have been an ever-evolving part of our business since the onset of COVID,” Mendoza says. “With prices skyrocketing, limited used inventory and fluctuations in new car availability, keeping up is a constant struggle.” 

Those skyrocketing prices and variable auction rates make managing used vehicle inventory a bit of a juggling act. “Books go up and down as new cars fluctuate, so you can see swings in the thousands from one week to the next in pricing at the auction.” He acknowledges the importance of explaining inventory issues to their customers. “If you don’t pass that information on to your client, they may just think you don’t know what you are doing, and they will go on to a dealership down the way.”

When asked what the key is to overcoming these challenges, Mendoza credited having a strategic focus on inventory management. San Leandro Honda’s approach centers on maximizing the potential of each vehicle, given the uncertainties surrounding new vehicle arrivals. This delicate balance between acquiring new stock and managing the existing used inventory is critical for maintaining business stability.

“Data is paramount,” Mendoza says. “You need to know what you can hold on, and what you have to move quickly. You need to know what that trade-in you are looking at would be replaced for, and what you can sell it for after you get through service.”

Decisions hinge on understanding market dynamics, assessing the potential of trade-ins, and calculating service and sale prices. This data-driven approach ensures that each vehicle is both a viable purchase for the customer and a profitable transaction for the dealership.

To stay ahead in this competitive market, San Leandro Honda leverages a variety of tools and resources. They employ comprehensive data analysis tools like AutoVision and monitor competitor websites and third-party sites to gauge market trends and consumer expectations. This holistic approach aids in accurately pricing vehicles and effectively communicating value to customers.

“You take all this together and you can better go to your customers and give a good, thorough explanation of why your car is priced right, and (why it is) the right car for them,” he explains.

The recent integration of AutoVision with Reynolds and Reynolds has further streamlined operations. This connected system facilitates more efficient data sharing and process management, enhancing overall operational efficiency and customer service.

“It is extremely helpful to have Reynolds and Reynolds send things right to AutoVision, and vice versa, instead of having a few different windows open and doing double and triple versions of the same thing in different systems. Once in Reynolds or AutoVision, it pushes to the other, from there it gets sent to all of our third-party vendors.”

Looking ahead to the 2024 used vehicle market, Mendoza and the dealership are taking a cautiously optimistic stance. Despite broader economic uncertainties, the stabilization in pricing and inventory points to a promising environment for customers seeking quality used vehicles.

“All outside sources paint a bleak picture of what is going on in the economy and the country as a whole, but inventory and pricing are stabilizing, so customers can find the right car at a great price.”

Adapting to market changes has always been a cornerstone of San Leandro Honda’s strategy. Recognizing that the market dynamics during the COVID-19 pandemic were exceptional, the dealership is preparing to revert to more traditional business models, albeit with necessary adjustments informed by current and anticipated trends. Mendoza and San Leandro Honda’s successes are testaments to resilience and adaptability in the face of many industry upheavals. Their experience and insights offer a valuable lens through which to view the complexities and strategies of managing a successful dealership in today’s fluctuating automotive market. They underscore a commitment to transparency and customer service, essential qualities in navigating the intricate landscape of automotive sales. 

You May Also Like

The SMS Paradigm: Reshaping Customer Engagement in the Automotive Industry

By reaching out through SMS, we have tapped into the potential of a less invasive, yet highly effective, method of communication.

The SMS Paradigm: Reshaping Customer Engagement in the Automotive Industry

In an industry that thrives on connection and communication, auto dealerships are turning toward a more nuanced and contemporary approach to engage with potential buyers. The shift from voice calls to SMS as the primary form of initial customer contact has not only been a response to the changing landscape of communication but also a strategic move to dramatically increase engagement rates and efficiency.

Scalpel or Machete? Cut Marketing Wisely

Understanding which of your marketing efforts is actually performing and where to cut safely is critical to success and growth this year.

December 2023 cover feature-Understanding which of your marketing efforts is actually performing and where to cut safely is critical to success and growth this year.
Turn Clicks into Car Sales: Unlock the Power of the Online Shopper

Dealers need to adjust their strategy to capture customers in the digital space. TrueCar has created an approach that is shaped to each consumer — and dealer — experience.

SEO and AI, Who Needs It?

How can SEO and AI improve your business? Look to your technology partners to implement AI-infused advantages on your behalf.

A.I. & Automotive’s Last Stand: Is ChatGPT Friend or Foe?

AI has sparked conversations from the showroom to the dinner table. Learn how to safely use AI to improve your dealership’s productivity.

Other Posts

Reynolds Releases Annual Retention Report, Examines Post-Pandemic Trends

In the 2024 Automotive Brand Retention and Defection Report, Reynolds and Reynolds looks at the impact those changing dynamics had on consumer behavior and retention.

Reynolds/CARFAX Collaboration Is Win-Win for Dealerships, Consumers

The integration provides consumers with meaningful information about a vehicle they’re considering buying. Not only will they have a history of maintenance and repairs for the vehicle, but in many cases, they’ll know where that work was done.

Gubagoo Unveils Prototype Customer Data Platform at NADA 2024

The Gubagoo CDP unifies customer information across dealer systems to give visibility into customer behavior at every touchpoint.

Reynolds and Reynolds Unleashes AutoVision at NADA 2024

Retailers will be able to achieve precise appraisals with AutoVision’s customizable adaptive market pricing algorithms.