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

Inventory turn rate measures how many times the entire inventory is sold and replaced in a period, directly indicating sales velocity.

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

NADA recommends maintaining 30–45 days supply of new vehicles to balance availability with carrying costs.

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

Aged inventory accumulates floor plan interest and carrying costs, making aggressive repricing or incentives the best strategy to move the unit.

Question 4

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

Accepted Answer

The cost-to-market ratio

Answer

Reconditioning costs increase the total investment in the vehicle, which directly impacts the cost-to-market ratio and potential gross profit.

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

Cost-to-market is the ratio of a dealer's total investment (acquisition + reconditioning) to the vehicle's current retail market value, indicating pricing competitiveness.

NADA - Certified National Automobile Dealers Association Consultant Practice Test

NADA - Certified National Automobile Dealers Association Consultant Practice Test

NADA Inventory Management