Aging used cars ripen on lots
Skip to main content
Sister Publication Links
  • Automotive News Canada
  • Automotive News Europe
  • Automotive News China
  • Automobilwoche
AN-LOGO-BLUE
Subscribe
  • Subscribe
  • Account
  • login
  • HOME
  • NEWS
    • Dealers
    • Automakers & Suppliers
    • News by Brand
    • Cars & Concepts
    • Final Assembly
    • China
    • Shift
    • Mobility Report
    • Special Reports
    • Digital Edition Archive
    • This Week's Issue
    • The first 2022 GMC Hummer EV Edition 1 sold for $2.5 million.
      Hummer EV, Bronco raise big money
      Tesla customers say the overcharges range from $37,000 to $71,000, according to CNBC.
      Buyers like Tesla, but not enough to pay double
      Ford created this gas-turbine truck for the 1964 World’s Fair.
      Ford's Big Red lives — parked in a garage
      Evergreen Subaru is moving to a larger facility, but the store won’t be as big as the ship that got stuck in the Suez Canal.
      Was stuck ship headed for a Subaru store? (Spoiler: No)
    • GAC Motor Co. launched sales of a new full electric crossover, the Aion Y, in March.
      New-vehicle sales rebound 75% in March from virus-hit 2020
      Wuling launched sales of its first pickup, the Zhengtu, on March 18.
      GM Q1 sales rebound but fall short of pre-COVID level
      The Ford Equator SUV arrived in the Chinese market on March 28
      Ford Q1 sales surge 73% over virus-hit 2020
      Xpeng P7 sedan on display at an auto show
      EV maker Xpeng setting up third plant to meet demand
    • As EV output explodes in China, e-axle drive assembly automates
      Plus to roll big rigs on a ‘continuum' toward self-driving future
      Lidar moves beyond vehicles to underpin a reimagined logistics chain
      Factories embrace Industry 4.0
    • Waymo self-driving van
      Waymo co-CEOs bring double vision for self-driving future
      Uber driver
      Uber, Lyft use rides to vaccines to get drivers, customers back on the platform
      Uber and Lyft
      Uber dangles higher pay to lure U.S. drivers back but warns it will not last
      Lidar system from Innoviz
      Shares of lidar sensor startup Innoviz rise in trading debut
    • Elon Musk interview
      Tesla’s Model Y, on sale since March, is a showcase of EV technologies competitors will benchmark.
      Technologies of Electrification
      Cadillac’s Lyriq EV will be unveiled Aug. 6.
      Future Product Pipeline
      A CALL TO ACTION
    • Beyer Auto Group COO John Altman, left, with Fixed Operations Director Patrick Brooke at the group’s Volvo dealership in Falls Church, Va.
      Dialing service customers brings them back
      Lexus, Mirai get new advanced technologies
      On the baby front, Volvo takes the lead
      A standalone showroom is one optional improvement dealers can choose to show off the SUV line. Those who do get a slight increase in Bronco allocation.
      view gallery
      8 photos
      About 100 Ford dealers to invest in dedicated Bronco stores
    • Access F&I
    • Fixed Ops Journal
    • Marketing
    • Used Cars
    • Retail Technology
    • Sales
    • Best Practices
    • Dealership Buy/Sell
    • NADA
    • NADA Show
    • Automakers
    • Manufacturing
    • Suppliers
    • Regulations & Safety
    • Executives
    • Talk From The Top
    • Leading Women Network
    • Guide to Economic Development
    • PACE Awards
    • Management Briefing Seminars
    • World Congress
    • Aston Martin
    • BMW
      • Mini
      • Rolls-Royce
    • Daimler
      • Mercedes Benz
      • Smart
    • Ford
      • Lincoln
    • General Motors
      • Buick
      • Cadillac
      • Chevrolet
      • GMC
    • Honda
      • Acura
    • Hyundai
      • Genesis
      • Kia
    • Mazda
    • McLaren
    • Mitsubishi
    • Nissan
      • Infiniti
    • Stellantis
      • Alfa Romeo
      • Citroen
      • Chrysler
      • Dodge
      • Ferrari
      • Fiat
      • Jeep
      • Lancia
      • Maserati
      • Opel
      • Peugeot
      • Ram
      • Vauxhall
    • Renault
    • Subaru
    • Suzuki
    • Tata
      • Jaguar
      • Land Rover
    • Tesla
    • Toyota
      • Lexus
    • Volkswagen
      • Audi
      • Bentley
      • Bugatti
      • Lamborghini
      • Porsche
      • Seat
      • Skoda
    • Volvo
    • (Discontinued Brands)
    • Virtual reveals (Sponsored)
      • MITSUBISHI: 2022 Outlander
      • NISSAN: 2022 Pathfinder and 2022 Frontier
      • GENESIS: 2021 GV80
      • KIA: 2021 K5
      • LEXUS: 2021 IS
      • NISSAN: 2021 Rogue
      • TOYOTA: 2021 Venza and 2021 Sienna
    • Auto Shows
    • Future Product Pipeline
    • Photo Galleries
    • Car Cutaways
    • Design
  • OPINION
    • Blogs
    • Cartoons
    • Keith Crain
    • Automotive Views with Jason Stein
    • Columnists
    • China Commentary
    • Editorials
    • Letters to the Editor
    • Send us a Letter
    • Mach-E
      For Ford, 3rd-party charging network must improve to reap Mustang Mach-E potential
      VW logo with reflection
      VW lied to sell diesels; now it lied to sell EVs
      265725_XC90_Inscription_in_Birch_Light.jpg
      Volvo targets top talent in U.S., China with generous parental leave policy
      Fisker gets a rare second chance to build his own car company
    • VW's Joke Is On You
      Joke Is On You
      In case of supply chain woes, break glass
      view gallery
      3 photos
      Leo Michael Cartoons - Q2 2021
      Leo Michael: There's Nothing You Can Do!
      Nothing You Can Do
      Tesla's 'Technoking'
      Tesla's 'Technoking'
    • Shifting gears away from the stick shift
      SEMA still a wonderful circus
      Penske still has plenty of races to win
      Ford's turn in the hot seat
    • April 6, 2021 | For Volkswagen, authenticity is the only path forward
      March 30, 2021 | Tesla “changes” car industry
      March 23, 2021 | Remote work will continue after the pandemic
      March 16, 2021 | Industry offers warning to Apple
    • Dan Shine
      Service drive can lift dealerships as source of used-vehicle inventory
      Dave Versical
      From doubts to duped: We won't be fooled again
      Willard J. De Filipps
      Dealing with a drop in LIFO reserves
      VW logo with reflection
      VW lied to sell diesels; now it lied to sell EVs
    • Why Xiaomi holds promise of becoming formidable EV player
      Geely’s new EV push is decidedly new age
      Charging poles installed outside a Tesla store in downtown Shanghai.
      Unreliable public EV charging sites prompt automakers to take wheel
      VW Group's playbook to dominate EV market
    • ‘Voltswagen' April Fools' gag far from funny
      Less is more in lineups as well as on lots
      Electric vehicle charger
      Electric vehicle hype opens door to short sellers
      Address vaccine doubts at work to lead U.S. back
    • There goes VW recycling again
      Mixed-use plan a winner
      EV adoption in U.S. shouldn't be forced
      Electric is the way to go for mail trucks
  • DATA CENTER
  • VIDEO
    • AutoNews Now
    • First Shift
    • Special Video Reports
    • Weekend Drive
    • AutoNews Now: EV battery decision looms for SK Innovation, LG Chem
      AutoNews Now: Ford skipping summer shutdown at many U.S. plants
      Mercedes leads Lexus, BMW in tight luxury race
      AutoNews Now: Chevy's electric Silverado to have more than 400 miles of range
    • First Shift: Hyundai to idle more output due to chip shortage
      First Shift: Biden's EV plan said to include $100B for consumer rebates
      First Shift: Stronger auto emissions rules coming by July, EPA head says
      First Shift: Automakers urge U.S. government to help with chip crisis
    • Virtual sales manager Jay Barger
      'Glued to a phone': Acura store's virtual sales boss lifts deliveries, efficiency
      One man’s journey from homelessness to thriving dealer
      Bert Ogden Auto Group
      How a Texas group is cutting costs, saving millions
      COVID, chips and checks: Sales headwinds and tailwinds for 2021
    • Why the pickup is the auto industry's 'battleground'
      Carlos Ghosn's quest to restore his reputation
      Why Ford must execute to avoid 'deep trouble'
      Why Honda is 'locked and loaded' for 2020
  • EVENTS & AWARDS
    • Events
    • Awards
    • Congress Conversations
    • Retail Forum: NADA
    • Canada Congress
    • Europe Congress Conversations
    • Fixed Ops Journal Forum
    • Shift: Mobility at a Crossroads
    • 100 Leading Women
    • 40 Under 40 Retail
    • All-Stars
    • Best Dealerships To Work For
      • Register for the 2021 Best Dealership To Work For
    • PACE Program
    • Rising Stars
    • Europe Rising Stars
  • JOBS
  • AN Solutions
  • +MORE
    • Leading Women Network
    • Podcasts
    • Webinars
    • In the Driver's Seat
    • Publishing Partners
    • Classifieds
    • Companies on the Move
    • People on the Move
    • Newsletters
    • Contact Us
    • Media Kit
    • RSS Feeds
    • Shift: A Podcast About Mobility
    • Special Reports Podcasts
    • Daily Drive Podcasts
    • AAM
    • Cars.com
    • DealerPolicy
    • Gentex
    • IHS Markit
    • Remember Group
    • Reputation.com
    • Ricardo: Dave Shemmans
    • Ricardo: Marques McCammon
    • Allstate: Want more from your F&I?
    • Ally: Navigating the future of automotive retailing
    • Amazon Web Services: Any place, any time, any channel
    • Amazon Web Services: The power of the cloud
    • Amazon Web Services: Universal translator: Harnessing sensor data to build better automotive software
    • Capital One Auto: Dealerships remain vital to an increasingly digital car shopping journey
    • DealerSocket: 5 steps to modernizing the buyer's journey
    • Epic Games: Real-time tech is the next frontier of automotive
    • Epic Games: Transforming the auto industry with digital assets
    • FTI Consulting: Crisis as a catalyst for change
    • Google: 5 trends shaping the auto industry's approach to a new normal
    • Google: Google's dealer guidebook helps dealers navigate today's digital landscape
    • IHS Markit: Automotive loyalty in the wake of the COVID-19 recession
    • IHS Markit: COVID-19: The future mobility delusion
    • Level5: 2020 Automotive E-Commerce Report
    • Motormindz: Toward hyperconnectivity: 5 ways to position your business to profit from connected car
    • Naked Lime: Bring social reputation together as part of big-picture marketing
    • Wells Fargo Auto: Switching gears from LIBOR to SOFR
    • Ally: Do It Right
    • DealerSocket
    • Deloitte: Cyber everywhere: Preparing for automotive safety in the face of cyber threats
    • Facebook: The road to a zero-friction future
    • Guide To Economic Development
    • PayPal Credit: How consumer financing helps drive sales for online auto parts retailers
MENU
Breadcrumb
  1. Home
  2. Retail
September 24, 2018 01:00 AM

Aging used cars ripen on lots

James B. Treece
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print

    After years of sermons about how aging used-car inventory loses value, dealerships have gotten religion on the importance of turning used vehicles in less than 60 days.

    But now used-car guru Dale Pollak says that old-time religion is out of date. Today, he says, 30 to 40 days is the new 60.

    "A used car always has been like a block of ice. Over time, it dissipates in value," said Pollak, founder of inventory management software provider vAuto and now a Cox Automotive executive vice president. "Today, it's like a block of ice sitting on a hot plate."

    But not all dealers and used-car managers have gotten that message.

    Inefficiency persists

    Automotive News asked vAuto to review its data on aging units in dealerships' used-vehicle inventory. Researchers pulled numbers on 11,874 franchised new-vehicle stores and independent used-only outlets.

    Of the dealerships reviewed, 16 percent had no used vehicles on the lot 60 days or more. Vehicles that had sat around that long represented no more than 10 percent of the inventory at another 21 percent of the stores.

    Those are seemingly good numbers. Five to seven years ago, the comparable figures would have been "considerably worse," Pollak said, based on what he saw then.

    But for 15 percent of dealerships studied, more than half of their used inventory had been on the lot 60 days or more.

    The numbers suggest that most dealerships get serious about turning vehicles after about 60 days: 58 percent of dealerships reviewed had no used vehicles on the lot 100 days or more. But at 2 percent of the stores reviewed, more than half of their used inventory was 100 days or more old.

    That 2 percent may not seem like a lot, but any vehicle in stock for 100 days or more is generally shunned, unlikely to move without deep discounting. An Automotive News staffer has even seen a late-model vehicle that had been gathering dust on a dealership lot for 15 months, or about 450 days.

    Pollak said he was shocked by the data: It's "surprising how much inefficiency is out there."

    Margin compression

    Margin compression — itself a function of Internet-enabled price transparency that lets shoppers know the local-market value of a specific used car or truck — has shortened the time that dealerships should let vehicles sit, Pollak said.

    He tracks used vehicles' cost to market. If a dealership owns a used car for $8,500 and the average retail asking price in that market for that car is $10,000, then that car's cost to market is 85 percent. Used vehicles usually sell at a cost to market with a percent range in the high 80s or low 90s, he said.

    When vAuto researchers track used inventory at the more than 10,000 dealerships with which they work, they usually divide vehicles into 15-day categories: 0-15 days, 16-30, 31-45 and so on. The clock starts ticking "as soon as you own the car," Pollak said. "The market value of the car doesn't depend on when you get it [retail] ready."

    Until about two years ago, Pollak said, used vehicles generally had a cost-to-market figure of about 82-83 percent in the first 15 days. Pollak almost never saw cost-to-market numbers hit 90 percent until 60 days.

    That has changed.

    "Today, I rarely ever see a dealer's inventory not hit 90 percent somewhere between 30 and 45 days," he said. "After about 30 to 45 days, the car represents no margin contribution capability to the dealership."

    Pollak has adjusted his view accordingly of how quickly dealerships should turn used vehicles.

    "If 60 days ever once was the norm or accepted benchmark, 30 to 40 has to be the new 60. It has to be," he said.

    Theory vs. practice

    Some dealers say they understand the theory, but question applying the practice in today's market.

    "Do we want to have a turn in under 60 days? Yes. Is it ideal to turn as many times as you can? Yes," said Dustin Walters, vice president of eight-dealership Friendship Automotive Enterprises in Bristol, Tenn. "But when market prices stay as high as they are, I can't go and replace that car for any cheaper than I already paid for it. At some point, I'm marketing the car somewhere lower than wholesale."

    And if the dealership sends an aging vehicle to auction just to be rid of it, that means absorbing extra transportation costs and auction fees.

    For those reasons, Walters said, "We've relaxed our rules a little bit," keeping used vehicles somewhat longer than the ideal. And if the group's stores need to wholesale a used vehicle to move it, Friendship prefers online auctions for lower fees.

    Still, Pollak said the takeaway for dealerships is straightforward: "The sooner they sell a car, the better the chance they have of making a gross profit."

    RECOMMENDED FOR YOU
    CarGurus CEO looks beyond listings for expansion
    Related Articles
    Pollak: Tech-based strategy trumps price-it-and-pray
    Letter
    to the
    Editor

     

     

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    CarGurus CEO looks beyond listings for expansion
    CarGurus CEO looks beyond listings for expansion
    New-vehicle sales rebound 67% in March, CAAM estimates
    New-vehicle sales rebound 67% in March, CAAM estimates
    Jeep sales climb in Japan as younger people warm to brand
    Jeep sales climb in Japan as younger people warm to brand
    Sponsored Content: Consumer automotive study: A focus on virtual F&I
    Sign up for free newsletters
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    See more newsletter options at autonews.com/newsletters.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Digital Edition
    Automotive News 4-5-21
    THIS WEEK'S EDITION
    See our archive
    Fixed Ops Journal
    Fixed Ops Journal 2-8-21
    Read the issue
    See our archive
    RETAIL TECHNOLOGY NEWSLETTER: Sign up for our Tuesday afternoon newsletter that breaks down the latest developments in how technology is changing the auto sales landscape.
    WEEKLY NEWSLETTER: Sign up to start your week with the top stories from the latest issue of Automotive News, delivered to your inbox first thing each Monday morning.
    Get Free Newsletters

    Sign up and get the best of Automotive News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today

    Get 24/7 access to in-depth, authoritative coverage of the auto industry from a global team of reporters and editors covering the news that’s vital to your business.

    Subscribe Now
    Connect With Us
    • Facebook
    • Instagram
    • LinkedIn
    • Twitter

    Our mission

    The Automotive News mission is to be the primary source of industry news, data and understanding for the industry's decision-makers interested in North America.

    AN-LOGO-BLUE
    Contact Us

    1155 Gratiot Avenue
    Detroit, Michigan
    48207-2997

    (877) 812-1584

    Email us

    Automotive News
    ISSN 0005-1551 (print)
    ISSN 1557-7686 (online)

    Fixed Ops Journal
    ISSN 2576-1064 (print)
    ISSN 2576-1072 (online)

    Resources
    • About us
    • Contact Us
    • Media Kit
    • Subscribe
    • Manage your account
    • Reprints
    • Ad Choices Ad Choices
    • Sitemap
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Automotive News
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • HOME
    • NEWS
      • Dealers
        • Access F&I
        • Fixed Ops Journal
        • Marketing
        • Used Cars
        • Retail Technology
        • Sales
        • Best Practices
        • Dealership Buy/Sell
        • NADA
        • NADA Show
      • Automakers & Suppliers
        • Automakers
        • Manufacturing
        • Suppliers
        • Regulations & Safety
        • Executives
        • Talk From The Top
        • Leading Women Network
        • Guide to Economic Development
        • PACE Awards
        • Management Briefing Seminars
        • World Congress
      • News by Brand
        • Aston Martin
        • BMW
          • Mini
          • Rolls-Royce
        • Daimler
          • Mercedes Benz
          • Smart
        • Ford
          • Lincoln
        • General Motors
          • Buick
          • Cadillac
          • Chevrolet
          • GMC
        • Honda
          • Acura
        • Hyundai
          • Genesis
          • Kia
        • Mazda
        • McLaren
        • Mitsubishi
        • Nissan
          • Infiniti
        • Stellantis
          • Alfa Romeo
          • Citroen
          • Chrysler
          • Dodge
          • Ferrari
          • Fiat
          • Jeep
          • Lancia
          • Maserati
          • Opel
          • Peugeot
          • Ram
          • Vauxhall
        • Renault
        • Subaru
        • Suzuki
        • Tata
          • Jaguar
          • Land Rover
        • Tesla
        • Toyota
          • Lexus
        • Volkswagen
          • Audi
          • Bentley
          • Bugatti
          • Lamborghini
          • Porsche
          • Seat
          • Skoda
        • Volvo
        • (Discontinued Brands)
      • Cars & Concepts
        • Virtual reveals (Sponsored)
          • MITSUBISHI: 2022 Outlander
          • NISSAN: 2022 Pathfinder and 2022 Frontier
          • GENESIS: 2021 GV80
          • KIA: 2021 K5
          • LEXUS: 2021 IS
          • NISSAN: 2021 Rogue
          • TOYOTA: 2021 Venza and 2021 Sienna
        • Auto Shows
        • Future Product Pipeline
        • Photo Galleries
        • Car Cutaways
        • Design
      • Final Assembly
      • China
      • Shift
      • Mobility Report
      • Special Reports
      • Digital Edition Archive
      • This Week's Issue
    • OPINION
      • Blogs
      • Cartoons
      • Keith Crain
      • Automotive Views with Jason Stein
      • Columnists
      • China Commentary
      • Editorials
      • Letters to the Editor
      • Send us a Letter
    • DATA CENTER
    • VIDEO
      • AutoNews Now
      • First Shift
      • Special Video Reports
      • Weekend Drive
    • EVENTS & AWARDS
      • Events
        • Congress Conversations
        • Retail Forum: NADA
        • Canada Congress
        • Europe Congress Conversations
        • Fixed Ops Journal Forum
        • Shift: Mobility at a Crossroads
      • Awards
        • 100 Leading Women
        • 40 Under 40 Retail
        • All-Stars
        • Best Dealerships To Work For
          • Register for the 2021 Best Dealership To Work For
        • PACE Program
        • Rising Stars
        • Europe Rising Stars
    • JOBS
    • AN Solutions
    • +MORE
      • Leading Women Network
      • Podcasts
        • Shift: A Podcast About Mobility
        • Special Reports Podcasts
        • Daily Drive Podcasts
      • Webinars
      • In the Driver's Seat
        • AAM
        • Cars.com
        • DealerPolicy
        • Gentex
        • IHS Markit
        • Remember Group
        • Reputation.com
        • Ricardo: Dave Shemmans
        • Ricardo: Marques McCammon
      • Publishing Partners
        • Allstate: Want more from your F&I?
        • Ally: Navigating the future of automotive retailing
        • Amazon Web Services: Any place, any time, any channel
        • Amazon Web Services: The power of the cloud
        • Amazon Web Services: Universal translator: Harnessing sensor data to build better automotive software
        • Capital One Auto: Dealerships remain vital to an increasingly digital car shopping journey
        • DealerSocket: 5 steps to modernizing the buyer's journey
        • Epic Games: Real-time tech is the next frontier of automotive
        • Epic Games: Transforming the auto industry with digital assets
        • FTI Consulting: Crisis as a catalyst for change
        • Google: 5 trends shaping the auto industry's approach to a new normal
        • Google: Google's dealer guidebook helps dealers navigate today's digital landscape
        • IHS Markit: Automotive loyalty in the wake of the COVID-19 recession
        • IHS Markit: COVID-19: The future mobility delusion
        • Level5: 2020 Automotive E-Commerce Report
        • Motormindz: Toward hyperconnectivity: 5 ways to position your business to profit from connected car
        • Naked Lime: Bring social reputation together as part of big-picture marketing
        • Wells Fargo Auto: Switching gears from LIBOR to SOFR
        • Ally: Do It Right
        • DealerSocket
        • Deloitte: Cyber everywhere: Preparing for automotive safety in the face of cyber threats
        • Facebook: The road to a zero-friction future
        • Guide To Economic Development
        • PayPal Credit: How consumer financing helps drive sales for online auto parts retailers
      • Classifieds
      • Companies on the Move
      • People on the Move
      • Newsletters
      • Contact Us
      • Media Kit
      • RSS Feeds