Ewald Kubota is Rural Lifestyle Dealer's 2017 Dealership of the Year in the multi-store category. Here's an excerpt detailing the dealership's used equipment strategy.
Ewald Kubota doesn't have the same level of used equipment inventory as dealers primarily serving row-crop farmers, but it’s still an area owner John Ewald likes to keep under control. Ewald wants to turn the used inventory 3 times a year. After a used unit has sat in inventory for 4 months, Ewald depreciates the unit by 5%. So, if a salesperson gives a customer $10,000 on a trade, after 4 months the dealership will write off $500 into a loss. “But then the salesman gets hit for the $500 that was lost. So on his commission report he shows a loss of $500. Essentially, the salesperson owns that trade unit until it’s sold.
“That depreciation is what we use to keep our used inventory turning. And we’re pretty hard on ourselves. We’ll depreciate a unit 5% every month and then we’ll reduce the sale price. The salesperson takes a hit, too, so it helps keep him honest when he makes the trade because he’s not going to overinflate because he knows he’s tied to that unit until it leaves the dealership.”
Read more about Ewald Kubota in the fall issue.