Car Dealership Inventory Audit Checklist: What to Look For

A close up of car inside a car dealership

Car dealers should conduct inventory audits at least quarterly to ensure accurate records, maintain compliance, meet floor plan lender requirements, and enhance profitability¹. Whether you’re learning how to do an inventory audit or need some help streamlining the process, ACV MAX is here to guide you every step of the way.

Understanding the Importance of Dealership Inventory Audits

Inventory audits verify that physical vehicle count matches recorded inventory. Completing these checks often, especially when you’re moving a high volume number of vehicles, helps identify discrepancies that could indicate theft or administrative errors.

Additionally, these audits are mandatory, as state and federal regulations require dealerships to maintain precise inventory documentation to protect consumers and prevent fraud from occurring. Failing to comply can trigger audits during tax season, along with significant penalties.

The Benefits of Learning How to Do an Inventory Audit

Audits offer numerous benefits beyond simply remaining compliant. Even better, knowing how to complete an inventory audit provides an advantage in a competitive marketplace. For example:

Simplified Stocking: Regular audits help identify your turnover ratio, which determines which cars are selling quickly and which ones are lagging behind². That way, you can stock vehicles that are the most in demand.
Improved Satisfaction: There’s nothing worse than having to tell a customer that the car they’re interested in is out of stock. Conducting regular audits helps you identify trends among car buyers, allowing you to stock accordingly.
Minimized Risks: Accounting errors and theft can cause significant problems for your dealership. Running frequent audits creates transparency and accountability.

Building a Reliable Dealership Inventory Audit Checklist

Pre-Audit Prep

Pinpoint your objectives and the scope of the audit. Are you auditing every vehicle or specific brands? Or are you auditing by vehicle category, location, or a particular timeframe?

Regarding documentation, gather recent sales records, contracts, pending transactions, and inventory management system reports. Choose ACV MAX's comprehensive data platform for an accurate, real-time view of this data.

Begin your physical count. The auditors should take note of each Vehicle Identification Number (VIN), make, model, year, color, and current location for each vehicle.

The auditors should document the condition of each vehicle, noting any issues that could affect its value. Take pictures of any noted damage to support claims.

Additionally, they should account for vehicles in service bays, off-site storage, or those currently being detailed or repaired. These vehicles are easy to overlook, and making special note of them now can save you a headache later.

This is another area where ACV MAX can streamline the process. Our tools allow auditors to scan VINs to instantly access vehicle history, market values, and condition reports. With this data, you can immediately identify discrepancies now instead of later.

Handling Discrepancies

With the physical counts complete, it’s time to compare the team’s findings with your inventory system’s records. Create a detailed list of all discrepancies; the most common are overages, shortages, or inconsistencies with a vehicle’s condition.

Most of the time, vehicles are double-counted or mislocated within your facility, but you need to reconcile these issues quickly. Check recent sales, trade, and transfer records. Since this can be a time-consuming process, consider using ACV MAX’s platform for a comprehensive transaction history that can help verify your records. The supporting documentation resolves discrepancies.

Documentation and Follow-Up Actions

Create a comprehensive audit document that includes your findings. It should also explain the discrepancies and how to correct them—crucial details for compliance and insurance claims.

The audit document is also a handy guide for improvement initiatives, ensuring that each subsequent audit is smoother than the last.

ACV MAX Takes The Guesswork Out of Inventory Audits

Knowing what’s in your inventory will reduce risk, boost profits, and help your dealership remain competitive. ACV MAX helps ensure audits run smoothly and efficiently. Better yet, with our data-driven insights, you can identify opportunities and trends to optimize your dealership based on what buyers are currently interested in. Learn more about ACV Max and schedule a demo for your dealership today.

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