The latest data from J.D. Power Valuation Services has used-vehicle prices ticking up by the close of 2019. That’s despite a softening in wholesale prices in June. At the segment level, mainstream passenger car prices are expected to be the strongest through the remainder of 2019, while compact and midsize car prices should increase. This will be driven by demand among price-conscious consumers and lower supply, with manufacturers discontinuing or cutting back new-vehicle production in these segments.
The firm noted that mainstream SUV prices should remain positive, with compact and midsize SUV prices projected to increase. “SUV prices will continue to be suppressed by increasing levels of supply coming back to the market,” the firm stated. “Even with increasing levels of used supply, healthy consumer appetite for used vehicles will help keep used values relatively strong.”
David Paris, executive analyst at J.D. Power Valuation Services, noted that while technology tools are essential for today’s retailers, so is “buying the right used-vehicle inventory at the right price that optimizes profit.” Turn rate, he adds, “is a constant challenge for automotive dealers.”
Seven years ago, BRAM Auto Group began staging weekly meetings at each of its rooftops to combat vehicle aging and margin compression. The conversation revolves around an evaluation sheet the group developed based on data generated by DealerSocket’s Inventory+, which the group installed in November 2007. Reviewed is transaction data, appraisal performance, each dealership’s buy and overstock lists, and much more.
The group has even created filters within Inventory+ so group executives and each dealership’s management team can, for example, look at how specific units with the same equipment performed. From that, the group will create watch lists, which simply means monitoring what competitors are doing from a pricing standpoint.
As for appraisals, the group wants to know if opportunities were missed and which appraisers are having big wholesale losses. Giuffre and the executive team also want to know how vehicles taken in on trade are booked out. The review also includes a check of Inventory+’s TrueTarget and TrueScore features, which provide live competitive pricing data as well as aggregated transactional data. The goal is see if a vehicle was advertised correctly.
This attention to detail is why, for example, the group’s Route 22 Honda in Hillside, N.J. is turning inventory every 14 days while averaging well north of $1,000 per copy in front-end profit. In fact, a peak into the dealership’s performance in April reveals that 90% of the Honda store’s inventory consists of core vehicles. The three other stores in the group’s north New Jersey segment aren’t far behind, turning inventory every 24 to 27 days.
“This is where Inventory+ stands above the rest; it makes recommendations based on how the market is doing and how a vehicle does at your store,” Giuffre says. “You don’t necessarily need to be the cheapest. You just need to have the right cars.”’