A Common Issue for Used Chevy Dealers: Denver Margin Compression

For used Chevy dealers, Denver is a decent marketplace for buying, reconditioning, as well as selling cars. Over the years though, this industry suffered the effects of margin compression. If you are a used car dealer, keep reading, as this may be helpful.

Margin compression happens when input costs inflate quicker than prices received from sales, which leads to a lower profit margin. Keep in mind that margin compression is a common phenomenon in the majority of industries.

In the used car business, this happens because average vehicle costs have increased, while the return on investment per car has dropped. Here are a few tips to keep the phenomenon under control:

  • Closely monitor acquisition costs;
  • Hold employees accountable when they slip up;
  • Keep reconditioning costs at a minimum.

For keeping an accurate track of company expenses, accountants strongly recommend using some kind of inventory management software. Such a kit may help dealership managers to better see the big picture, allowing for more efficient cost management.

In conclusion, effectively managing expenses may add good money on top of the existing profit margin. For used Denver auto Dealers will thus become a more profitable market.