The total cost of used car inventory is more than just the price you pay to buy a vehicle. From transportation costs for getting a vehicle to your lot, to preparing it for sale and financing it, expenses can quickly add to your total investment in a unit before it sells.
Keeping track of those costs can help you see your total investment in each vehicle, not just its purchase price. And because every vehicle takes a different path before it leaves your lot, the costs tied to one unit may look different from the next.
So, what should you consider when looking beyond the purchase price? Here are a few costs that may be worth tracking to ensure you have an accurate picture of your total investment.
What Goes Into Used Car Inventory Costs?
The purchase price is the starting point, but it may not tell the whole story.
Depending on where you source a vehicle, its condition, how it gets to your dealership and how you finance it, there may be other expenses along the way.
Looking at these costs together can help you understand the total cost of an individual unit. The exact expenses will vary by dealership and vehicle, but having a consistent way to track them can give you a clearer view of your inventory investment.
Start With Vehicle Acquisition Costs
What you pay for a vehicle is an important part of understanding your total investment.
Depending on where and how you source inventory, your vehicle acquisition costs may also include applicable auction or other purchase-related fees.
Keeping those expenses tied to the individual vehicle can give you a clearer starting point before you account for transportation, preparation and other costs that may come next.
Account for Vehicle Transportation Costs
Once you’ve purchased a vehicle, you still need to get it to your lot or to the buyer.
If a vehicle needs to be transported from an auction or another acquisition source, those expenses can become another part of your overall used car inventory costs.
Tracking applicable vehicle transportation costs by unit can help you see more of what you’ve invested before the vehicle reaches your lot.
Track What You Spend Preparing the Vehicle
Some vehicles need very little work before they’re ready for customers. Others may require a larger investment.
Mechanical or cosmetic work, parts, detailing, and services from outside providers can all contribute to what you’ve invested in preparing a vehicle for your frontline.
Keeping those expenses connected to the individual unit can help you account for the costs between acquisition and frontline.
Want to learn more about the preparation process itself? Explore our Used Car Reconditioning for Dealers: How to Get Inventory Frontline-Ready blog.
Include Applicable Financing Expenses
How you finance a vehicle can also contribute to your overall investment.
If you’re using a floorplan for financing, you may have applicable interest, fees or other charges based on your floorplan agreement.
Knowing your floorplan terms helps you see which costs apply so you can easily track them.
Want to learn more about how floorplan terms work? Explore our blog on how to determine the right term for your dealer floorplan.
Keep Other Vehicle-Specific Expenses in View
Not every expense happens when you buy, transport or prepare the vehicle.
Depending on the unit and your dealership, you may have other vehicle-specific expenses before it sells. These could include applicable maintenance, additional cleaning, fuel or charging, or other needs that come up along the way.
The expenses that make sense to track will depend on your dealership. What’s important is deciding which vehicle-level costs matter to your business and tracking them consistently.
Doing so can give you a more complete view of your dealership inventory costs across units.
Support Your Inventory Investment With AFC
Understanding the total investment in your vehicles can give you a clearer picture of the costs behind your inventory.
When it comes to financing those purchases, AFC offers flexible floorplan financing solutions designed to support independent dealers and their inventory needs.
Learn more about AFC floorplan financing or get started today.
Frequently Asked Questions About Used Car Inventory Costs
What costs are included in used car inventory?
Used car inventory costs can include the vehicle purchase price along with applicable acquisition fees, transportation, vehicle preparation, financing and other vehicle-specific expenses. The exact costs will vary based on the vehicle and dealership.
Why should dealers track used car inventory costs?
Tracking relevant expenses by vehicle can give you a clearer picture of what you’ve invested in each unit beyond just its purchase price. A consistent approach can also make it easier to compare total costs across your inventory and evaluate future purchases.
Are used car inventory costs the same for every vehicle?
No. Costs can vary based on where and how you acquire a vehicle, transportation needs, vehicle condition, preparation work, financing and other expenses associated with the unit.
*Disclaimer: AFC does not guarantee any results for floorplan financing and examples are for illustrative purposes only. Dealers should consult their own advisors to make independent business decisions regarding floorplan financing and inventory sourcing. “AFC” refers to Automotive Finance Corporation, Automotive Finance Canada Inc., and AFC Cal, LLC in their respective jurisdictions.
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