A Simple Explanation of Market Days Supply
The latest automotive industry buzzword, Market Days Supply (MDS), is a calculation derived by dividing your currently available supply of inventory by your average daily retail sales rate over the past 45 days. The resulting number should give an accurate reflection of how desirable your inventory is to your customers:
- LOW MDS a combination of high/fast sales rate and low, currently available inventory for a particular Year, Make, Model and Trim;
- HIGH MDS a combination of low/slow sales rate and high currently available inventory for a particular Year, Make, Model and Trim.
Experts agree that the goal for your dealership’s MDS should average 70 – this number demonstrates that you have achieved a well-balanced automotive inventory. However, that does not totally exclude vehicles with an MDS greater than 70 from being in your inventory; a 70 MDS is simply the average.
Once a car is evaluated, you can easily figure out if it will be a good purchase. If a car’s MDS is less than 60, the decision to purchase is clear – this car should turn quickly! You should be more cautious with vehicles above 125 MDS because they will likely need much more aggressive marketing and retail pricing in order to turn.
How can calculating MDS help your dealership? First and foremost, it will aid you in figuring out what cars your customers want. Cars will move off your lot at record speeds when you buy desirable inventory. Furthermore, MDS can help you to keep your pricing competitive to attract customers while still protecting your profit. Finding the perfect balance can be hard when it comes to pricing vehicles, and MDS can be your best ally.
A great way to take advantage of Market Days Supply and other data for your dealership is to use Laser Appraiser Dealer Studio. Dealer Studio provides VIN valuation, vehicle sourcing, vehicle appraisal, RETAIL MARKET PRICING, Exit Strategies, and much more. To put it simply, Dealer Studio will help you FIND vehicles, APPRAISE them, PRICE them, and SELL them.