Most people have rather straightforward experience buying or servicing a car, but the backend of auto-retail is far from trivial. Behind the scenes, cars are being shipped and handled through distribution centers, sold and serviced through the network of franchised car dealerships.
Here we will discuss one of the major annoyances in the car retail – so-called lot location.
There are five main participants in inventory management for car retail and service:
Distribution centers. Cars from the factory do not normally go directly to car dealers. They are often shipped to car distribution centers that consist of very large lots, where the cars are stored and handled
Car dealerships. On average, American car dealers are much larger than their European equivalents both in terms of sales numbers and the service facilities they operate. Most importantly they carry large inventories averaging hundreds sometimes thousands of cars.
Financial companies. The car dealers are selling the cars, usually based on so-called revolving lines of credit, and the financial companies/banks providing that financing have the first lien on the cars they financed. Car inventory may be worth tens of millions of dollars. The inventory owned/processed by the dealers and financial companies is called a floor-plan inventory.
Technology Vendors. These companies provide various technologies to Car Dealers and financial vendors that allow inventory physical monitoring and control. Those include DMS Vendors, that provide car dealers with main operating technology tools as well as companies that specifically provide technologies for inventory physical monitoring.
Service vendors. These companies provide labor intensive physical inventory monitoring and control services. Such companies are hired by car dealers and financing companies to check physical presence of cars on the lot.