What is meant by 'turning inventory' in a dealership?

Turning inventory in a dealership refers to the strategy of selling vehicles quickly to keep the stock fresh and reduce the costs associated with holding unsold inventory. This process is crucial for maximizing profitability, as it directly impacts cash flow and operational efficiency. By focusing on prompt sales, dealerships can ensure that they are not only meeting customer demands but also minimizing the costs that arise from having unsold cars, such as depreciation, maintenance, and insurance. A high inventory turnover indicates that a dealership is effectively managing its stock, which is essential for sustaining business operations and maximizing revenue.