How to Process Sale or Return Vehicles

Sale or Return (SOR) vehicles are provided to a dealership by a third party, such as a manufacturer or another dealership, under an agreement where the dealership will either sell the vehicle or return it if unsold within a specified period.

Key Characteristics of SOR Vehicles

✅ No Upfront Purchase Cost – The dealership does not purchase the vehicle outright but holds it in stock under a consignment arrangement.

✅ Profit on Sale – The dealership earns a margin on the sale, usually based on a pre-agreed price with the supplier.

✅ Return if Unsold – If the vehicle does not sell within the agreed timeframe, it can be returned to the supplier, avoiding stock depreciation costs.

✅ Flexible Inventory Management – SOR vehicles allow broader inventory offerings without tying up capital in vehicle purchases.

Steps to Process SOR Vehicles in Navigator

1. Enter the Vehicle into Stock with a Zero Value

? Why? Since the dealership has not purchased the vehicle, the system should not register a cost until it is sold.

• In Navigator, go to Vehicle Administration Toolkit > Add Stock Record.
• Enter the vehicle as a normal purchase but set the purchase price to zero (£0.00).
• This keeps the vehicle in stock without affecting nominal ledger accounts.

2. Update Expected Costs Before Invoicing

? Why? To ensure accurate profit margin calculations and marginal VAT, the expected cost must be set before invoicing.

• Navigate to the Purchase screen within the stock record.
• Enter the expected cost of the vehicle.
• Verify that all cost elements (e.g., transport fees, prep costs) are recorded correctly before invoicing.

3. If the Vehicle is Sold

? Action: Proceed with standard invoicing, ensuring that the profit calculation reflects the actual sale price minus the agreed supplier cost.

• Create the sales order and invoice the vehicle as normal.
• Ensure that the final invoice reflects the cost agreed with the supplier.
• Confirm that marginal VAT calculations are correct before completing the deal.

4. If the Vehicle is Not Sold

? Action: Remove the vehicle from stock by reversing any associated costs and cancelling the deal.

• Reverse any costs posted to the vehicle.
• Invoice these costs to an internal sales ledger account to clear financial records.
• Cancel the deal to remove the vehicle from active inventory.
• If required, return the vehicle to the supplier per the SOR agreement.