New-vehicle inventory shortages are exposing weaknesses in the turn-and-earn allocation systems for some automakers. They’re looking more like “turn-and-burn” systems, and the glitches seem especially hard on the smaller dealers.
We all know about turn-and-earn. Basically, a dealer has to sell some cars to get more of them. Vehicle allocation is based on sales history, which makes sense until you drill down and look at how the vehicles are actually being distributed.
For example, I was just talking to the local Ford dealer while our pickup truck was in his shop getting serviced. He told me Ford takes a snapshot of his inventory twice a month. Let’s say the second check is on the 25th of the month. Well, any sales he makes after the 25th don’t count toward the current month; they count toward the next month.
That slows down the ordering process. He won’t see some vehicles he has ordered for two months.
There also have been times the factory has insisted he had certain models in stock when he was completely out of stock.
And vehicles that are in transit are counted as available for sale even though they haven’t arrived at the store. But if he tries to sell the vehicle and take a deposit on it before it shows up it can’t be reported as a sale.
I’ve heard similar gripes from GM and Chrysler dealers. Can’t say I’ve heard from any import dealers, but I certainly welcome their feedback.
I think it’s great that the push system is dead and factories have cut production. But now might be a good time to rethink vehicle allocation.