One of the best indicators of how your dealership is performing is your inventory turnover ratio. The formula is simple:
Once you have your dealership’s ratio, how do you interpret whether it’s good or bad? In the case of inventory turnover, the lower the better. The lower your number, the more your inventory moves, and the more money your dealership is making. If you have a high number, your inventory is stagnating and you are losing out on sales.
It’s obvious that a decrease in inventory turnover would result in a loss of sales, but what causes a decline in turnover?
Even if your inventory turnover ratio is low, there’s always room for improvement.