3 Strategies for Managing Dealership Inventory in a Tariff Economy

With new tariffs and changing consumer behavior, the automotive retailing industry is facing a lot of uncertainty. Analysts predict vehicle prices will increase by $4,000 to $10,000 or more, leading to a drop in sales of up to 1.3 million units.

To navigate the challenges ahead, an effective inventory management process is essential. Your key control system, combined with location tracking, offers the insight you need to adapt to shifting market conditions. Here are three ways to use it to your advantage. 

1. Prioritize Aged Inventory  

Rising vehicle costs and a projected 18% increase in floor planning expenses make it more important than ever to keep inventory moving. Vehicles that depreciate before they’re sold could severely cut into what little margin remains after higher procurement costs. 

Rising vehicle costs and a projected 18% increase in floor planning expenses make it more important than ever to keep inventory moving.

Use your key management system’s inventory reports to quickly identify which units have been sitting the longest. In the KeyTrak system, you can configure automated aged inventory prompts at checkout. For example, if a salesperson pulls a key for a newer model, the system can suggest similar vehicles that have been on the lot longer, giving them an opportunity to introduce alternatives that help your bottom line.

You can customize exactly how your system identifies similar vehicles by adjusting criteria like: 

• Minimum age threshold for prompts
• Number of suggested vehicle alternatives  
• Matching criteria (make, model, trim level, price, years, etc.).
• Minimum number of criteria that must match for a vehicle to be suggested 
  
  

Inventory Age Report 

2. Organize Your Lot Strategically  

Identify in-demand vehicles by tracking market trends and seeing which models are being test driven and sold most often. Your key management system provides valuable data on which models customers are test driving, giving you firsthand insight into shifting consumer preferences.  

With location tracking, you can view all your inventory on a map of your lot and use filters to see where different types of vehicles are parked, helping you plan your lot layout. 

For maximum impact, consider these organization strategies:  

Maximize Your Used Vehicle Inventory 

With limited inventory and higher prices on new vehicles, the used vehicle market is heating up. Use location map filters to locate and group all preowned inventory by manufacturer or vehicle type. 

Create EV Zones  

For EVs eligible for the tax credit of up to $7,500, create a dedicated section with signage about the incentive. To create a sense of urgency, make customers aware that the credit isn’t guaranteed to last. (Be sure to disclose that there are income limits to qualify for the credit.) 

Rotate Aging Inventory to Prime Locations  

When viewing your lot map, filter for vehicles that haven’t moved recently (e.g., within 24 hours, 48 hours, or 7 days). For a broader view, run the Stationary Vehicles Report to see all units that haven’t moved in up to 30 days. Once you’ve identified stagnant inventory, move those vehicles to more prominent locations. 

Reposition Entry-Level Vehicles 

Experts expect entry-level vehicles (cars under $30,000) to experience severe price hikes and inventory shortages, making them unaffordable for buyers. Place lower-priced vehicles in high-traffic areas to capture budget-conscious shoppers before they're discouraged by higher-priced inventory. 

Showcase Your New Vehicles Prominently 

When the new year models come in, avoid simply unloading them and parking them wherever there’s space. Instead, position them by the main entrance to entice customers driving by. Filter by year, manufacturer, vehicle type, or stock number to quickly locate specific inventory and create strategic groupings that drive sales in this challenging market. 

Key and Vehicle Location Map 

3. Streamline Test Drives  

Customers are more hesitant to buy, so once they set foot on your lot, it’s important to remove any obstacles that give them an opportunity to change their mind. With real-time location tracking tools, you can locate any vehicle instantly with a map pin showing its position on your lot. This capability transforms the test drive experience in several areas: 

• Pre-Arrival Preparation: When a customer schedules a test drive, search by stock number to locate the vehicle and key before they arrive. This eliminates wait time and creates a seamless first impression.
  
  
• Walking the Lot: If you're already walking the lot with a customer, use your key control app to search for vehicles matching their criteria. You can then use the app to see how close you are to each vehicle in real time, helping you navigate efficiently without leaving the customer waiting.
  
  
• Reducing Abandoned Test Drives: You can see the location of both keys and vehicles before physically retrieving them. This feature is especially valuable when keys are already checked out, preventing the all-too-common scenario where a customer loses interest while waiting for you to track down a key or vehicle. 
   
  
  

Vehicle Location Features in KeyTrak's Mobile App

In today's economy, where customers are more hesitant about making large purchases, reducing friction in the test drive process can be the difference between a sale and a walk-away.  

Don’t just use your key management system for security — put it to work as an inventory management tool. Prioritize aged inventory, organize your lot with real-time data, and streamline test drives to drive sales and protect your bottom line as margins tighten.