How to Implement a Write-Down Account for Your Used Inventory

A smarter way to protect gross and manage aging units.

Let’s talk about one of the most overlooked, under-leveraged tools in the dealership business: the write-down account.

If you’re serious about making money in the used major units department — and not just shuffling numbers around on paper — you need to be proactively managing over-valued units before they get stale. That’s where a write-down reserve strategy comes in.

Let’s walk through the why, what, and how of implementing one so you can protect your margins, price to market, and stay in control of your aging inventory.

What’s a Write-Down Account?

It’s simple: when a unit is worth less today than what you booked it in at, you’ve got two options.

1. Ignore it and hope it sells at your number. (Hint: it won’t.)
2. Adjust the value and get real about what it’ll take to move it.

A write-down is that second option. You reduce the book value of a used unit, ahead of time, to reflect today’s market — not last month’s appraisal mistake. It’s recorded as an expense, typically against cost of goods sold (COGS), and gives your sales manager the freedom to price it right without “taking a loss.”

Why It Matters

Here’s what happens when you don’t use a write-down account:

• A unit sits 90+ days while your team clings to the fake margin.
• You finally drop the price, eat a $1,500 “loss,” and shake your head.
• Your gross numbers are skewed, and managers lose confidence.

Meanwhile, the unit that could’ve sold in 10 days is now dead weight.

A write-down strategy keeps your inventory, margins, and sales team aligned with reality.

The Best Practice: Create a Reserve

The best operators don’t wait until units age out — they build a reserve every time they sell a new unit. It’s like insurance for your used department.

Step 1: Fund the Reserve

Every time you retail a new unit, move $100 (or more or less per unit) into a Used Write-Down Reserve. This is a $100 debit to COGS and a $100 credit to the reserve account.

Sell 60 new units this month? That’s $6,000 sitting in a fund you control, ready to fix mistakes before they hurt you.

Step 2: Allocate Monthly

At the end of the month, your GM or Sales Manager sits down, looks at the used inventory list, and makes smart write-down decisions. A unit that’s 90 days old and still booked $1,200 too high? Fix it.

Here’s the move:

• DR Write-Down Reserve: $1,200
• CR Inventory: $1,200

Now that unit can be priced where it needs to be, and when it sells, the gross is real.

Example

Let’s say you took in a used RZR for $17,000. After 60 days, the market’s shifted and now it's worth $15,500. Without a write-down, your manager’s stuck. Drop the price and it looks like you lost $1,500. Hold the line and it sits another month.

But with a reserve in place, you apply a $1,500 write-down and rebook the unit at $15,500. Now your sales manager can reprice, close the deal, and the gross is clean.

Why This Works

It protects true gross. No more phantom profits or hidden losses.

It frees up your team. Managers price to move, not to protect bad trades.

It builds a margin safety net. Mistakes happen, and this makes sure they don’t tank your month.

It turns inventory faster. Less emotional baggage on trades. More velocity on the floor.

Accountants love it. Cleaner books, smoother P&L, better forecasting.

Bottom Line

Your dealership’s long-term profitability doesn’t just come from selling more — it comes from managing better. A write-down reserve is one of those “small hinges that swing big doors.” Easy to implement. Huge impact over time.

If you’re ready to stop carrying dead weight in your used inventory, give your managers the confidence to price aggressively, and run a tighter financial operation, this is where you start.

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