The Dealer Lab: Inventory hygiene

By Max Materne

This article originally appeared in the February issue of Powersports Business.

Every dealership has that bike. The one that came in with all the right intentions. Good color. Right model. A confident forecast. Everyone was sure it would move quickly.

And then it didn’t.

New units arrive. Promotions shift. Salespeople gravitate toward what’s easier to sell. That bike stays put, quietly aging on the floor while attention moves elsewhere.

No one wants to discount it. No one wants to wholesale it. And no one wants to say out loud what everyone already knows. Time has passed, and the unit is worth less than it was the day it arrived.

Eventually, the loss shows up anyway. It always does. It just shows up all at once, when the unit finally sells or heads to auction, and everyone feels the sting at the same time.

That moment is what we’re sitting with inside The Dealer Lab right now. Not how to avoid losses, but how we recognize them.

Because the uncomfortable truth is this: inventory does not suddenly lose value when it wholesales. It loses value gradually, quietly, every single day it sits. So what happens if a dealership stops pretending otherwise?

Treating inventory as an asset

Inside The Dealer Lab, we’re actively testing a different way of thinking about unit inventory. Not as something to protect until the very end, but as an asset that behaves exactly the way assets behave. It depreciates over time.

This isn’t a finished system. It’s a live experiment. The premise is simple, even if the implications ripple outward.

When a unit enters inventory, its pricing future is mapped immediately. Not emotionally. Not reactively. Deliberately.

The unit begins at MSRP and stays there for a defined period. Before any price movement happens, the unit has to actually be seen. That matters more than most stores admit.

Seen means it’s live on the dealership website. It’s pushed through social media stories and listed on national marketplaces like Cycle Trader. It’s photographed properly, merchandised clearly, and given a legitimate chance to sell. Only after that exposure window closes does the clock start.

From there, pricing steps down on a predictable cadence. For our first test, we’ve chosen a 90-day MSRP hold period. That may change. The trigger itself can vary. End of free flooring. MAP expiration. A fixed number of days on the floor. The specific trigger matters less than the consistency.

Right now, we’re planning to start with monthly price adjustments. Quarterly, weekly, or even daily adjustments are all possible. Monthly feels like the right place to begin, and we’re letting the data tell us whether that cadence holds or needs to evolve.

The most important thing we’re testing isn’t the size of the price drop. It’s what happens when pricing becomes boring and predictable instead of emotional and reactive.

Removing emotion from inventory

As pricing steps down, something else starts happening quietly in the background. The economic reality of the unit gets acknowledged in real time.

Instead of pretending the loss doesn’t exist until the end, the dealership absorbs it gradually.

Yes, margin declines as retail price drops. But so does the internal cost of the unit, typically at a slower rate. This isn’t a new or exotic idea. It’s rooted in a long-standing accounting principle called conservatism.

Conservatism says inventory should be valued at the lower of what you paid for it or its current market value. If we can agree that a 240-day-old unit is less valuable than a fresh one, then that principle applies at the individual unit level as inventory ages.

As cost is reduced, inventory value on the balance sheet comes down. And because accounting always balances, that reduction flows into the P&L as an increase in sales department costs. Often, this shows up through an inventory adjustment account.

This is where the experiment gets interesting. If a sales manager is paid on departmental contribution, the cost of aged inventory is no longer a surprise event at the end of the year. It becomes a steady, visible pressure. The incentive shifts naturally. Moving older units sooner becomes the smarter move. Avoiding an aged unit in favor of the margin on a newer one stops being a free decision.

The loss is still real. But it’s planned, expected, and spread out. The shock is gone. At the same time, we’re testing a parallel adjustment on the cash side. As units age, a portion of sales revenue is automatically applied toward the flooring principal. Not aggressively. Not recklessly. Just enough to prevent a sudden cash event later.

When sales are strong, balance sheets heal faster. When sales slow, cash stays protected. The system flexes instead of breaking. By the time a unit sells, the outcome isn’t surprising. The future loss has already been acknowledged.

The unexpected cultural shift

One of the most interesting things we’re watching isn’t customer-facing at all. It’s internal behavior. Salespeople stop avoiding older units. Managers stop having emotional debates about whether to “give it one more month.” Inventory meetings get quieter, calmer, and more honest.

When the economic pain has already been recognized, selling an older unit no longer feels like taking a hit. The sting has been removed. Inventory hygiene stops feeling like discipline and starts feeling like relief.

We’re not claiming this fixes everything. But it’s already changing the tone of the conversation in ways we didn’t fully anticipate.

The question that always comes up

The first reaction I’ve heard from other dealers when proposing this idea is, “if price drops become predictable, won’t customers just wait until it gets cheaper?” Some will. And some will miss the unit entirely. That tension is the feature, not the flaw.

Urgency shifts away from artificial pricing pressure and toward availability. The price path is predictable. The outcome is not. A customer can wait and hope the unit is still there, or they can buy now and secure it.

We already understand this behavior everywhere else. You can buy winter clothes cheaper in the summer. You can grab swim trunks on closeout when it’s snowing. This is no different.

The goal is to hold margin while units are still shiny and new, then strategically reduce price as time passes and dust collects.

If it sells, the next one isn’t cheaper. It arrives later, costs more (back at MSRP), or doesn’t exist at all.

In practice, predictable pricing can actually restore credibility to MSRP. Discounts aren’t arbitrary. They’re tied to time, not negotiation.

And it changes the sales conversation. When a customer asks for a specific price, the answer isn’t “no.” It’s “not yet.”

With a known depreciation curve, we can point to a date on the calendar and say, “That price will be reached on this date. I’ll call you the moment it happens if it’s not already sold.”

That last part matters. If it’s not already sold. Time creates trust. Availability creates urgency.

Why we’re doing this out loud

If you’re already doing something like this, or you’ve tried it and backed away, I want to hear from you. What worked? What broke? What surprised you? You can email me directly at max@ownex.io.

The traditional dealership model treats loss like a failure. Something to avoid until it can’t be avoided anymore.

What we’re testing treats loss like aging. Unavoidable. Sometimes uncomfortable. Manageable if you respect it early.

Inventory doesn’t become a loss when it goes to auction. It becomes a loss slowly, while everyone is hoping it won’t.

What happens when a dealership stops hoping and starts planning? We’re finding out in real time.

And we’ll be sharing what’s working, what isn’t, and what we’re rethinking live on The Dealer Lab Podcast, wherever you find your podcasts.