Preparing Your Vehicle Inventory for a Closing
One of the most difficult tasks you will encounter when selling a dealership is completing your vehicle inventory and preparing those vehicles for the closing. Here are some helpful tips to get you through a closing:
Reorganize the Inventory: Some dealerships already have well-organized inventories, but many others seem to have vehicle arrangements that have no rhyme or reason. Your inventory should be separated by category so that a vehicle can be easily located. Used vehicles should be completely separate from new vehicles, line-makes should not be commingled, and same-model vehicles should be located together. Additionally, if you have multiple lots, make sure same-model vehicles are all on the same lot.
Reorganize the Non-Inventory: A dealership has many vehicles on its lot that are not part of the active inventory, such as service loaners, rental vehicles, customer vehicles being serviced, customer vehicles being held for non-payment, vehicles going to the auction, junkers, new and used vehicles that are being worked on, and employee vehicles. Like the active inventory, these vehicles should be organized by category, and they should be marked so others know to which category the vehicles belong. Some of these vehicles, such as service loaners, rental vehicles, and new and used vehicles being worked on, will most likely be purchased by the buyer. However, if the buyer cannot find the vehicles, the buyer will not purchase the vehicles. A sophisticated buyer will also want to match up the customer vehicles to open repair orders.
Locate Missing Vehicles: By the day before the closing, you should have gathered up any “missing” vehicles. These vehicles are not necessarily “missing” in the truest sense of the word, they just aren’t on the lot where they should be. These “missing” vehicles may just be service loaners out with customers, but they could also be vehicles the dealership has loaned out to organizations within the community or you have on display somewhere. A lot of times, an employee or family member of the dealer will have a demo which is overlooked. Recently, I was at a closing where a vehicle had to be retrieved from a local golf course. The particular vehicle was a hole-in-one prize that was never won.
Taking the Inventory: At least a week prior to the closing, you should take a complete inventory of your vehicles. As part of this process, it is extremely helpful to have the vehicle stock number displayed on the dashboard or rear view mirror for ease of locating vehicles. Your dealer lawyer will provide you with a spreadsheet for this purpose. Once you have completed your inventory and the spreadsheet, you should revise it each day as vehicles are being sold or delivered. Immediately prior to the closing, you should conduct a second inventory for verification purposes.
PDI: If you have not performed a PDI on a new unit prior to the closing, then you will most likely lose your PDI credit to the buyer. As you approach the closing date, make sure to PDI each vehicle within a reasonable amount of time after the vehicle hits the lot. It is extremely likely that you will get one or more deliveries near the closing date, so you do not want your PDI work to pile up.
Keys: Whether you have the old-fashioned pegboard or a key tracking system, there are always missing keys. If you cannot provide the buyer with at least two keys for each new vehicle, you will have to reduce the purchase price. Prior to the closing, take an inventory of the keys and locate any missing ones. They are usually in the service department or in a salesperson’s desk.
If you need more assistance with your vehicle inventory or the closing process, please contact your experienced dealer lawyer. We suggest that you always have an experienced dealer lawyer present at your closings.