Trustur AI
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Done for you in 5 minutes.
Walk away with a comprehensive, ready-to-use annual operating budget customized for your dealership. It maps out your projected inventory costs, reconditioning expenses, overhead, and sales margins to keep your cash flow healthy.
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Running a used car dealership is a high-stakes balancing act where cash is constantly tied up in depreciating metal sitting on your lot. To stay profitable, you need more than just a gut feeling about next month's sales; you need a structured financial roadmap. This annual budget and financial plan acts as your dealership's financial engine, mapping out your projected inventory costs, reconditioning expenses, floor plan interest, and sales margins. Dealership owners typically need this comprehensive plan before starting a new fiscal year, when securing or renewing lines of credit, or when trying to plug cash flow leaks. A truly great budget doesn't just guess at future sales; it accounts for the real-world friction of the automotive trade. It factors in seasonal buying trends, realistic vehicle turn rates, average reconditioning costs per unit, and the creeping costs of holding inventory too long, giving you a clear, actionable path to keep your cash flow healthy and your lot profitable.
Divide your total monthly fixed dealership overhead (rent, insurance, salaries, and floor plan interest) by the average number of vehicles on your lot, then divide that monthly figure by 30 days. This gives you the exact cost of letting a single car sit idle for one day, which helps you decide when to wholesale a slow-moving unit.
A healthy independent dealership should target an inventory turn rate of 10 to 12 times per year, meaning vehicles sit on the lot for an average of 30 to 35 days. Budgeting for a turn rate faster than 30 days is risky unless you specialize in high-demand, low-margin economy cars.
Allocate an average of $800 to $1,200 per vehicle for standard reconditioning, though this should be adjusted based on your target inventory age and source. Fleet lease vehicles and younger trade-ins generally require less work, while older auction buys frequently exceed $1,500 in mechanical and cosmetic prep.
Floor plan interest is a direct cost of goods sold that fluctuates with your inventory size and interest rate changes, making it distinct from fixed overhead like rent. Isolating this expense allows you to accurately measure your true gross margin per vehicle and monitor the cost of your financing lines.
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