NADA Inventory Management 3

Question 1

Which of the following best describes a 'model mix' analysis in new vehicle inventory planning?

Accepted Answer

Evaluating which vehicle configurations and trim levels best match local market demand

Answer

Reviewing service records by model type

Answer

Comparing factory incentives across different model lines

Answer

Analyzing warranty claim rates by vehicle model

Question 2

A dealership's used vehicle inventory shows an average of 58 days to sell. What is the most likely impact on profitability?

Accepted Answer

Increased carrying costs reducing net profit per unit

Answer

Higher gross profit per unit due to better negotiating position

Answer

Reduced floor plan interest since used vehicles have no factory floor plan

Answer

Improved customer satisfaction scores

Question 3

When a NADA consultant conducts a used vehicle appraisal process review, which element is most critical to evaluate first?

Accepted Answer

The accuracy and consistency of the vehicle appraisal against current market values

Answer

The trade-in customer's credit score

Answer

The reconditioning bay capacity

Answer

The vehicle's CARFAX report length

Question 4

Which inventory management practice helps a dealership avoid 'cherry picking' at auctions, where buyers acquire only desirable units while leaving difficult-to-sell vehicles behind?

Accepted Answer

Implementing a data-driven acquisition strategy based on local market demand and cost-to-market targets

Answer

Buying only certified pre-owned vehicles

Answer

Restricting purchases to manufacturer-branded auctions only

Answer

Setting a maximum vehicle age limit of three model years

Question 5

What is the recommended action when a dealership's new vehicle days supply significantly exceeds the manufacturer's recommended level?

Accepted Answer

Reduce new vehicle orders and focus sales efforts on clearing existing inventory

Answer

Request additional factory allocations to balance the mix

Answer

Increase MSRP pricing to maximize gross on remaining units

Answer

Transfer all excess inventory to the used car lot immediately

Question 6

A NADA consultant reviewing dealership financials notices that 'total inventory carrying cost' includes which of the following components?

Accepted Answer

Floor plan interest, reconditioning costs, insurance, and storage overhead

Answer

Only floor plan interest charges

Answer

Manufacturer invoice price and destination charges only

Answer

Sales commissions and F&I reserve income

Question 7

Which strategy is most effective for reducing used vehicle inventory that has exceeded 60 days on the lot?

Accepted Answer

Reviewing market pricing and adjusting the retail price to align with current market conditions

Answer

Relisting the vehicle at a higher price to signal quality

Answer

Transferring the vehicle to wholesale and booking the loss

Answer

Removing the vehicle from the online listing and offering it only in-store