Inventory management of franchised car dealerships in Malta

Abstract

Purpose: This study analyses the application of inventory management principles in local franchised car dealerships. It aims to examine procedures, techniques as well as other factors which are relevant to the storage and sale of vehicles in showrooms and stores. Design: In answering the research objectives, a qualitative approach was adopted whereby 10 semi-structured interviews were held with Sales and General Managers of franchised car dealerships in Malta. Findings: The findings revealed that even though participants have their own ways of managing their inventory of vehicles, the procedures and techniques used are very similar. Research findings ascertained the importance of maintaining adequate records and applying appropriate internal controls to safeguard inventory. Findings also show that the use of sales budgets is key for effective inventory management. With regards to the valuation of vehicles, an interesting method highlighted by interviewees was the individual valuation of each vehicle. The findings also revealed, that franchisees are burdened by costs to comply with manufacturers’ requests as well as other existing risks and challenges. Conclusion: Inventory in local franchised car dealerships is effectively managed as various principles of inventory management are applied and practised. Nevertheless, most franchisees seem to lack awareness on current plans and regulations published by the European Commission. This study therefore concludes that more focus should be placed on raising awareness in this regard to ensure that employees are updated and knowledgeable on what is happening in the automotive industry. Value: This study is the first to analyse inventory management procedures in local franchised car dealerships. Moreover, the research presents recommendations which could assist current and future employees of the automotive and car dealership industry in effectively managing their stock of vehicles.