tips For Dealer Inventory Sourcing

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Dealer sourcing inventory

Dealer sourcing inventorySome of the challenges that occur when running a dealership is figuring out how, when and where to buy inventory. Floor plan finance companies, such as NextGear Capital, can provide dealers with tools and resources to help develop a purchasing strategy that fits their business.  

Where to purchase inventory 

One of the most popular places for dealer inventory sourcing is at a physical auction location. Manheim is one of the world’s largest auto auction companies. They have more than 100 physical auction locations across the world. In addition to inventory, at these locations you can find an array of products and services like reconditioning, inspections, dealer financing, transportation, title management, and marshalling. Manheim also holds Mobile Auctions at non-traditional locations, such as the back lot of a dealership, a hotel, convention center or race track 

Nowadays, you can purchase inventory for the dealership without leaving your lot. Using digital auctions means dealers can search for inventory from the comfort of their offices, instead of visiting a physical auction. For example, Manheim Express is a digital app that allows dealers to buy and sell whenever and wherever.  

There are even dealer inventory sourcing opportunities outside of traditional auctions. At NextGear Capital, we understand the unit you’re after may be in an auction lane or on a neighboring lot, which is why we offer additional inventory acquisition opportunities. Qualified dealers may use their line of credit on trade-ins, off-street purchases, rollovers from other lenders and dealer-to-dealer purchases. 

To find auctions close to you, check out our Universal Source Network, consisting of more than 1,000 auctions. You can find these locations using our auction finder tool. 


When to purchase inventory  

Though selling cars is a primary focus for a dealer, a secondary focus is a dealer’s ability to know when it’s time to buy more units. In order to determine when to buy, a dealer should set realistic monthly stocking and sales goals.  

How many units can you sell in a month? How much inventory should your dealership stock? To answer these questions, we recommend using three floor plan finance formulas to determine appropriate stocking and sales numbers. With those calculations as a starting point, your dealership should be able to get into a rhythm of adjusting stocking and sales goals based on results and current dealership conditions. 

Another thing to consider before adding fresh inventory, is determining how you deal with aged inventory. Does your dealership have an established exit strategy for aging inventory? If so, is that strategy consistently followed? Establishing a strategy for vehicles at 15, 30, 45 and 60 day intervals gives your dealership a good idea of what to do at any point in a vehicle’s lifecycle. 

Here are some more tips for aging inventory management. 

How to purchase inventory 

Using floor plan financing is one of the quickest and easiest way to source inventory at auction. Many auction locations accept floor plan financing companies as a payment option. This means that at auction, a dealer only really has to worry about buying inventory.  

 With a floor plan, dealers don’t have to worry about handling back-end operations and details. All a dealer will have to do is bid and take blocked tickets to the correct department to complete their purchase. For cash-only dealers, they may be required to fill out additional paperwork.  

The dealer inventory sourcing process at online car auctions is just as easy as at a physical auction. Find the vehicle you want and make a bid. Once you win a bid for a vehicle, the check-out process should be simple. Though every digital auction check-out will vary, a few key options remain the same. You’ll have the opportunity to select a method to pay for your vehicle purchase, and a floor plan will often be one of those options. 

To start dealer inventory sourcing with a NextGear Capital line of credit, apply here or contact us for any additional questions.