Learn how to calculate inventory holding cost for your used car inventory. Ideal for independent dealers, automalls and high volume dealerships. Visit http://www.simplerecon.com/Savings-Calculator.htm5 to calculate potential savings by using a reconditioning process tracking software to track your reconditioning times and identifying opportunities

1. HOLDING COST CALCULATION

2. FINANCE COST
• DIVIDE YOUR MONTHLY FINANCE COST BY NUMBER OF FINANCED CARS IN INVENTORY AND
NUMBER OF DAYS IN THAT MONTH (OR YOU CAN USE 30 AS A GENERAL NUMBER)
• IF YOU DON’T FINANCE, USE THE RISK FREE RATE + 1% TIMES COST OF CARS IN INVENTORY

3. DEPRECIATION
• USE PRICING DETAILS FROM BLACK BOOK TO SEE HOW THE PRICE OF YOUR INVENTORY
DEPRECIATES
• USE PRICING TRENDS FROM YOUR AUCTION WEBSITE TO SEE THE POTENTIAL DEPRECIATION OF
INVENTORY IF YOU DO NOT SELL IT QUICKLY

4. OPPORTUNITY COST
• EVERY DAY THAT YOU DON’T SELL THAT CAR, YOU ARE LOSING THE OPPORTUNITY TO BUY
ANOTHER CAR AND TRY TO SELL THAT CAR
• THIS IS COMMONLY KNOWN AS INVENTORY TURN. SO THE LONGER YOU TAKE TO TURN
INVENTORY, THE HIGHER YOUR TURN TIME WILL BE

5. FORMULA
TOTAL CARRYING
COST
FINANCE COST
DEPRECIATION
OPPORTUNITY COST
= +
+

6. LEARN MORE AT
http://www.simplerecon.com/Recon-
Blog/Carrying-Cost-for-used-car-at-the-
dealership.htm5

7. SAVINGS CALCULATOR
http://www.simplerecon.com/Savings-
Calculator.htm5