Managing Truck Inventory Extremes: From Shortage to Surplus

The trucking industry has often gone through times of high vehicle production and sales, followed by years of big drops. When asked to describe these economic cycles, an executive replied, “The feasts are way too short, and the famines are way too long.” That feast-and-famine cycle is evident in recent data: In 2024, heavy-duty truck sales fell 9.9% year-over-year, yet preliminary orders in December of that year jumped 39% illustrating just how quickly conditions can change for dealers. Still, there are strategies to help them manage effectively, whether they're facing a surplus or a truck inventory shortage.

Be Prepared for Market Shifts

Dealers can often predict changes in truck demand through early signs. Historically, the period before new emissions regulations take effect often triggers a pre-buy, as fleets pull forward their orders. Dealers see inventory rise, followed by a predictable dip in sales the next year.

Of course, not every swing can be anticipated. Events like pandemics, geopolitical unrest and the unexpected imposition of tariffs can disrupt demand with little warning.

If dealers stay closely aware of current market information and understand manufacturing lead times, it can give insight into potential shifts in demand. Constantly monitoring inventory levels is just as important. While originally aimed at electronics distributors, advice from this article apply here as well: “If you aren’t already, making use of inventory management software allows you to track levels in real time, and gives you advance insight into any potential issues.”

When it comes to ensuring dealers have the right amount and kind of inventory, data is key. Historical sales patterns and market trends can ensure they're stocking a well-balanced inventory. Track key performance indicators such as inventory turn ratios, stockouts, carrying costs and lost sales to offer insight into where adjustments may be needed, which can help to avoid both overstock and understock situations.

Dealers can also consider leveraging artificial intelligence and machine learning to gain better insight into inventory stocking levels, supply and demand, and manufacturer production volumes.

It’s also a good idea to stay in close communication with suppliers as they can provide visibility into production plans. Strong supplier relationships can help dealers adjust order levels quickly based on supplier output and their own demand forecasting.

According to a McKinsey & Company survey, 80% of companies still rely on traditional sales and operations planning procedures that lack real-time decision-making or automation. This is a gap that dealers have an opportunity to close. 

Overstock and Understock

Too much or too little inventory can create equally serious problems. Excess stock ties up working capital that could go elsewhere. Insufficient stock leads to lost sales and reduced revenue, and it can frustrate customers, damage a dealership’s reputation and even push buyers to a competitor.

Multilocation dealerships have the ability to redistribute inventory across sites, helping avoid both overstocking and understocking. Analyze inventory at each location and across the entire network so it’s  easier to redistribute stock based on local demand. This will allow dealers to optimize the inventory they have on hand.

Many dealers carry safety stock to prevent shortages. While this can reduce the risk of stockouts, carrying extra inventory comes at a cost. The decision requires balancing the financial burden of holding additional inventory against the operational risk of running out.

If a stockout does occur, contact affected customers as soon as possible and let them know when the issue will be resolved. And when the issue involves a component, consider suggesting an alternate product from another supplier. 

It’s Not Set and Forget

Managing inventory levels is an ongoing process. As market conditions shift, manufacturer production levels fluctuate and customer needs evolve, inventory strategy has to evolve with them. Dealers should regularly review and adjust both inventory levels and vehicle mix to maintain the right balance: enough stock to meet customer needs without carrying so much that dealership profitability takes a hit. 

Explore CDK’s inventory solutions to see how they can address your dealership’s inventory challenges.