📉 Is Aging Inventory Tanking Your Bottom Line?

New car inventory is on the rise—up 7%, according to the latest reports by LotLinx—and used vehicle carryover remains steady.

Sounds like everything’s coming up Milhouse, but don’t pop the champagne just yet.

With the day supply for new cars rising by six days, dealers are facing a familiar foe: aging inventory.

What the Data Tells Us

Aged inventory has always been a thorn in the side of dealerships, and the problem isn’t going away anytime soon.

In fact, it’s getting worse—new vehicle aged inventory is rising by 2% every month, while used vehicles are seeing a 5% increase. This build-up poses a significant challenge as aging inventory takes up valuable space and ties up dealership resources.

With nearly half of the vehicles on dealer lots now considered "aged," the pressure is mounting. The longer these cars sit unsold, the more they depreciate, and the harder they become to move.

This trend is forcing dealerships to grapple with decisions on how to adjust pricing and balance their inventory strategies.

Over 56% of dealers report difficulties in moving older models, and nearly 40% say they are executing price markdowns weekly.

Yet, only 25% report that markdowns regularly increase VDP views, and 19% say markdowns never improve visibility for specific vehicles.

Adding to the complexity, 53% of dealers face pressure from manufacturers to move inventory, while 52% report competitive pressures and 43% worry about brand devaluation due to frequent markdowns.

The report also sheds light on the mixed impact of markdowns. While markdowns can help move inventory, the strategy doesn’t always deliver the desired results.

With a 4% decline in the average last listed price, dealers are clearly relying on markdowns to stimulate sales, but that doesn’t necessarily translate into higher sales numbers.

In fact, despite widespread markdowns, the rising day supply indicates that inventory turnover isn’t happening fast enough to keep up with the influx of new vehicles.

Markdown strategies are often deployed weekly, with nearly 40% of dealers using them regularly. However, many dealers report that markdowns don’t always lead to an increase in VDP views, which suggests that price cuts aren’t the sole solution to moving inventory.

In the end, dealerships that can adapt to these challenges will be best positioned to thrive. The pressure is on to find smarter, faster ways to manage inventory and avoid getting stuck with vehicles that no one wants to buy.

5 Strategies for Managing Aging Inventory

1️⃣ Consider Using Online Marketplaces and Auctions

If you’re struggling to move aging inventory, it might be worth exploring online marketplaces or auctions. These platforms can expand your reach beyond local buyers, potentially attracting interested shoppers who might not have come across your vehicles otherwise.

2️⃣ Think About Partnering with Other Dealerships or Wholesalers

Collaborating with other dealerships or wholesalers could be a helpful strategy. By networking within the industry, you may find partners who are interested in purchasing older stock, allowing you to move inventory more quickly and at competitive prices.

3️⃣ Explore Social Media Engagement

Social media platforms like Facebook and Twitter/X could be a great way to promote aging inventory. Posting high-quality photos, videos, and engaging descriptions might capture the attention of potential customers and bring more visibility to your vehicles.

4️⃣ Refresh Vehicle Merchandising

Giving your aging inventory a bit of a makeover might help. Refreshing photos, adding videos, and providing clear, compelling descriptions could make a significant difference in how buyers perceive your vehicles online, leading to increased interest.

5️⃣ Revisit Your Website’s Specials and CTAs

It may be helpful to update your specials page and streamline calls-to-action (CTAs) on your website. Highlighting aged inventory on your specials page and simplifying the buying process with clear, focused CTAs could enhance the customer experience and boost sales.

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