NADA Inventory Management

Question 1

What metric best measures how quickly a dealership's new vehicle inventory is sold and replaced within a given period?

Accepted Answer

Inventory turn rate

Answer

Gross profit per unit

Answer

Days supply on hand

Answer

Front-end profit margin

Question 2

A dealership's new vehicle inventory has a 90-day supply. According to NADA best practices, what is the recommended days supply for new vehicle inventory?

Accepted Answer

30–45 days

Answer

15–20 days

Answer

60–75 days

Answer

90–120 days

Question 3

Which inventory aging policy action is most appropriate for a new vehicle that has been on the lot for more than 90 days?

Accepted Answer

Conduct an aggressive markdown or incentive program

Answer

Transfer it to wholesale immediately

Answer

Reassign it to a demo unit

Answer

Hold it at original MSRP to protect gross

Question 4

In used vehicle inventory management, what does the term 'reconditioning cost' primarily affect?

Accepted Answer

The cost-to-market ratio

Answer

The vehicle's trade-in allowance

Answer

The manufacturer incentive payout

Answer

The floorplan interest rate

Question 5

Which of the following best describes 'cost-to-market' as used in used vehicle inventory management?

Accepted Answer

Total investment in the vehicle divided by its retail market price

Answer

The dealer's purchase price divided by wholesale book value

Answer

Reconditioning cost divided by days on lot

Answer

MSRP minus dealer invoice price

Question 6

A NADA consultant reviewing a dealership's used vehicle operations finds an average cost-to-market ratio of 92%. What does this indicate?

Accepted Answer

There is little room for gross profit after expenses

Answer

The dealership has strong gross profit potential

Answer

The dealership's vehicles are priced well below market

Answer

The reconditioning costs are below industry average

Question 7

Which tool does a dealership most commonly use to determine appropriate wholesale acquisition prices for used vehicles at auction?

Accepted Answer

Third-party market data platforms such as vAuto or Kelley Blue Book Instant Cash Offer

Answer

Manufacturer window sticker

Answer

Floor plan lender appraisal

Answer

MSRP pricing guide