2 Minute Overview - NADPE
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This document discusses the problem of idle and obsolete parts inventory at auto dealerships. It states that on average 30% of a dealership's parts inventory, worth $88,264, is made up of parts that do not meet their stocking criteria and have a low likelihood of selling. These parts represent frozen capital sitting on shelves. The solution proposed is an online marketplace called NADPE Exchange that allows dealerships to bulk exchange their idle parts for parts needed by other dealers, avoiding the expense of traditional disposal options. It claims this will help dealerships better manage their parts inventory and free up money currently tied up in parts that are not selling.
2 Minute Overview - NADPE
- 2. If a used car sat on your lot for 90 days you would immediately dump it to a wholesaler or auction because it’s frozen capital. Also you would have already implemented your used vehicle write down policy 30 days ago. But idle parts inventory has to sit on your shelf for 360 days, before its given a second thought. That part is frozen capital also, and you have a lot more idle parts than you have in 90 day Used Vehicle Inventory THE PROBLEM
- 3. We address this problem. 30% Of the Parts Inventory of Every Dealer in North America is Tied Up In Idle & Obsolete Parts - “Non-Stock” & “Auto-Phase Out” Parts That Don’t Fit Their Stocking Criteria. *Source: NADA & Others
- 4. *Source: NADA & Others THE COST The average dealership in North America has $294,214 of parts inventory, $88,264* of which is Idle & Obsolete parts A large dealership can have $700,000 or more of parts inventory, with $210,000 or more is Idle & Obsolete parts – Frozen Capital • Non-Stocking (NS) & Auto Phase-Out (AP); don’t qualify under Stocking Criteria because of little or no sales demand. • NS & AP Parts have of 35%-85% probability of never selling. Parts older than 12 Months have a 95% chance of never selling. Regardless of how many months an NS or AP part has been on the shelf, it’s a problem on Day 1 when it should have sold and didn’t. The old 12 Month- No-sale policy for idle parts no longer applies.
- 5. *Source: NADA & Others FROZEN CAPITAL
- 6. THE REASON Why do you have parts in inventory that have such a small likelihood of selling? Because you’re stuck with them. The manufacturer won’t take them back, and your Parts Return Eligibility is too low to accommodate them. But these are good parts, still sellable, and needed by customers at other dealers. They are just not sellable at your dealership.
- 7. Options Your options are limited and expensive outside of the Manufacturer's return process … … Until Now • Sell to Other Dealers – no mass collaboration, and no platform to facilitate “bulk” transactions • eBay or Craigslist – too much time & effort to be useful • Auction – recover 15% or less • Salvage – recover 5% or less • Haul It Away – lose 100% + cost of disposal
- 8. An online marketplace for OEM Dealers THE SOLUTION Exchange Exchange parts – Reallocate & Redistribute with other dealers. NO parts cost reduction. Dollar For Dollar Exchange BUY & SELL Buy/sell parts – 50% of dealers cost. Secondary option for dealers to move parts in bulk after the trade platform has been exhausted. CLOUD BASED Cloud-based – fast, efficient, minimal effort
- 9. THE PRODUCT
- 10. HOW IT WORKS ONCE ACCEPTED BY BOTH SIDES LIST Parts managers give us a list of their NS & AP, and “Active” Parts, so we can Bulk Exchange Idle for Active parts ACCEPT We send the Parts Managers transaction orders to accept or reject MATCH NADPE’s Matching Engine process all of the requests & creates matches INVOICE We invoice each party for our fee only when a transaction occurs PAY & SHIP The parties handle payment between themselves. Ship out parts Freight Prepaid CONTACTS We send each party the contact info of their transaction partner
- 11. In The Past, Parts Managers Managed Inventory. In Today’s Market, They Manage Money. How Well Is Your Money Being Managed?
- 12. Let’s Solve The Problem Together Crystal Nicholson cnicholson@nadpe.com Jordan DePoortere jdepoortere@nadpe.com 1-855-623-7311