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.