Stock turn measures the efficiency of how a business manages its inventory, and it’s one of the most important KPIs in retail. A high stock turn indicates that you’re selling products quickly and efficiently.

The average automotive stock turn is 30 days, meaning it takes around a month for a retailer to sell and replace its stock. 

Stock turn is more complex in automotive retail than in most other retail industries. Just like elsewhere, automotive stock turn is affected by the speed of your sales process and pricing strategy. But it’s also impacted by vehicle movements from one site to another, longer and more convoluted buying processes, and inventory that has various specifications. 

Ultimately, a car dealership’s stock turn reflects its underlying efficiencies. For example, a low stock turn rate might indicate slow vehicle movements and inefficiencies in the sales process. If cars aren’t moving quickly to optimal sales locations, it means your stock is taking longer to reach potential buyers, and you’re incurring losses from car depreciation and holding costs.

How much do car dealerships stand to lose by holding stock for too long?

A senior team at a leading AM100 group’s internal estimate for the cost of holding stock is around £40 per car, per day.

Here’s why the cost of holding stock is so high for dealers:

• Interest charges have risen considerably in recent years. According to recent financial reports from dealer groups, such as Sytner Group, interest charges have doubled from £28.8 million to £48 million (correct at the time of writing). This is because interest rates drastically increased from 3.5% in January 2023 to 5.25% by August, before decreasing slightly to 4.75% in November 2024.
  
  Interest rates directly impact car dealerships’ bottom lines because they typically use “inventory financing” to acquire stock. Inventory financing is a loan businesses take out to purchase inventory, where the stock (in this case, the cars) is the collateral.
  
  The loan lets you buy cars for your inventory without paying upfront, but it also means you’re required to pay the creditor back with interest. The longer your stock sits in inventory unsold, the more interest you’ll pay.
  
  

• Depreciation. Cars depreciate much faster on average than many other goods, such as furniture or jewellery, meaning depreciation rapidly affects your stock’s value.
  
  Various factors affect a car’s depreciation, including its brand, trim, age, mileage, number of previous owners, warranty and service history, and more. A new car depreciates by around 15% in its first year, and it can lose around 60% of its value after the first five years.

As a result, the longer you hold stock, the greater the impact of interest and depreciation on your bottom line. 

The financial impact is further exacerbated by the nature of inventory management in automotive retail, which involves frequent and costly movements. Our data revealed that up to 50% of used cars sold at multi-site groups are moved between locations as part of the sales process. 

Additionally, if these movements take longer than expected—which is often the case—your bottom line takes a hit. In our experience, moving vehicles across locations can take around 4 days, despite dealerships aiming for a target of 2 days. This means:

• The dealership loses an extra £80 to interest and depreciation for every car moved as part of the sales process.

• There’s an opportunity cost of the extra 2 days because they could’ve been spent turning more stock.

• There’s a heightened risk of losing the customer if they choose to go elsewhere or change their mind in these 2 days.

Thus, multi-site groups can uncover opportunities for substantial cost savings (potentially up to seven figures) by optimising their logistics models for speed, whether through third-party providers or internal drivers.

Why is inventory management so challenging in automotive retail?

The financial impact of holding stock for longer than expected is substantial. Automotive retailers literally can’t afford to ignore it. Even when multi-site groups are aware that low stock turn is impacting their bottom line, we see that they struggle to reach their target results. 

This is often because of the complexity of automotive inventory. Some of the factors in play are:

• The specificity of each vehicle. Cars and other vehicles have various specifications (e.g. trims, colours, model years, and engine types or sizes). Used cars further add to the complexity, because you’ll need to account for older model years, mileage, modifications, general condition, etc. All these considerations make managing car inventory trickier than other retail industries like clothes or consumables.
  
  

• Additional inventory. Cars aren’t the only inventory that dealerships manage—you may also stock car parts, accessories, and items for servicing and maintaining vehicles.
  
  

• Higher prices. Cars are big-ticket items, which always translates to longer and more complex buying processes on average.
  
  

• Frequent inter-site vehicle movements. Multi-site dealers have to move cars frequently across sites as part of the buying process, such as for a customer viewing or to complete a sale. These movements aren’t cheap. A single movement can cost £100-120 per car via third-party logistics (3PL) providers, and £35-55 per car via internal drivers or transporters. This means if a car moves for no value (i.e., the sale isn’t closed) or more times than necessary, the margin on it takes a significant hit.

Increase automotive stock turn and improve your bottom line with Jigcar’s AI-driven logistics optimisation

The complexity of automotive inventory management makes it difficult to monitor costs, track the speed of movements, and optimise transport methods. Additionally, automotive businesses with internal drivers and transporters also have to plan transport processes—and doing so manually is costly, painful, and slow.

We developed Jigcar to help automotive retailers like you unlock profit trapped by your logistics by moving cars quickly, cost-effectively, and to the right locations. This results in:

• Increased stock turn. Jigcar’s AI offers suggestions to quickly place your cars in optimal sales locations, helping you get them in front of the right customers and reduce the frequency of movements. This results in both an increased stock turn and reduced days-to-sell.
  
  

• More visibility into your logistics and reduced costs. Jigcar is a centralised platform for managing all your multisite, group-wide vehicle movements across all transport types. Quickly move your vehicles to the right sites and minimise the instances where cars are moved for no value.
  
  

• Improved customer experiences. Optimising your logistics and stock placement doesn’t just improve your bottom line, but also helps you deliver superior customer experiences. Optimal car placements and quick movements get your cars in front of the right customers at the right time—and sales are closed more quickly.

These outcomes can significantly impact your bottom line, by potentially up to seven figures. In fact, our logistics optimisation had a £1.2m per year impact on a 30-site used car dealer group’s bottom line. That’s a bottom line impact of £41,000 per site, per year.

Here’s a closer look at the total impact of using Jigcar, with our handy savings calculator:

Overall, the 30-site dealer group saved over £210,000 per year by reducing movement costs, £480,000 in savings from the cost of holding stock, and £514,285 from potential profit by increasing movement speed, and therefore stock turn.

Interested in discovering how Jigcar can improve your bottom line? Book a demo with us today.

Conclusion: Accelerating stock turn is the key to profitability

In automotive retail, where the cost of holding and transporting stock is high, accelerating stock turn is the key to positively impacting your bottom line. 

Optimising your stock placement and improving the speed of vehicle movements can reduce costs, increase revenue, and help you deliver superior customer experiences.