This conversation could blossom because now we're talking about the strategy that can make or break pay per click campaigns. Typically, I like to talk about the simple concepts and let the software handle the complexity, but since you asked ...
For each vehicle in stock, we actually aren't advertising to the level of specificity you mentioned typically. You could, but searching at that level is not typical search behavior. We are using keyword variations around the "used jeep liberty" and many variations of that theme. In another ad group, we may even get more generic (with ad copy to match) for the "used jeep" searcher.
The difference between the super generic term "sierra" and the "used jeep" terms are that in the "sierra" term, we're so generic that we can't see any searcher intent in our keywords. "sierra", both broad and phrase (since it's just one word) is much too generic. Once you've selected a vehicle that is either exclusively a vehicle term, like "RAV4" it's not as important, but if you hope to deep link, the "new" and "used" qualifiers do help with classification. Jeep is a very obvious vehicle term so that is a great first level filter, adding the phrase "new" and/or "used" almost guarantees vehicle interest (plus provides classification).
When it comes to broad, phrase, and exact matching ... (fortunately you don't have to choose just one, you can make smart decisions where it counts and take a mixed bag approach)
In any scenario where an advertisers budget is the limiting factor (ie. there are more clicks available than budgeted for), I would absolutely try to use the available funds on exact match terms first. They are the most qualified and highest converting clicks. Let me caution you, that means that you have a good list of keywords, not uber generic, nor weak. It requires that you periodically use Google Insights, mine organic search phrases for high volume strong converting phrases, and use other available tools to identify search trends. Those phrases need to exist in your campaign if you want to use the above strategy.
If there aren't enough exact match searches available to efficiently consume an advertisers desired goals, introducing phrase match would be the next best option. it's actually a great match type to utilize as long as you don't use it on any single word keywords. It's even a little shady on two word phrases, but if they are good qualified words like "used jeep" then they are fine. They are less qualified than exact match but are easier to manage for the end user (but no harder for an automated system obviously). In our strategy, we typically bid a little less than the exact match variation for these keywords since they incur some unintended searchers and in the bid auction, would prefer our exact match to "win" whenever it can (since we can really deliver the best matched ad very reliably). That means that when exact match fails to match, we still have a phrase variation that may be considered for the auction.
Lastly, we would bring in broad match. Typically I don't recommend broad match for short phrases, but on long tail phrases, they work since Google has enough information to really understand the intent of your broad match. That said, even in that circumstance you get enough confusing search phrases showing your ad that you want to control, but can't without a constantly evolving set of negative keywords. Again, broad match gets a lower bid value than even phrase match in our strategy since it's the least qualified audience for our ads.
This staggered bidding lets the best matching keyword win. We've done this, so ... no one has to make this mistake themselves anymore ... but if you were to:
set up three ad groups, one for service, one for parts, and one for brand.
create specific ad text relevant to each of those themes.
create a keyword for "honda service" in the service, "honda parts" in the parts, and "honda" in the branding campaign (set all bidding equal, or better yet, say that you want to bid less on parts keywords).
Then have a searcher type in "honda parts". You'd think Google would pick your Honda parts ad group and show your Honda parts ad and let you deep link to your Honda parts landing page ... but they don't. They look at all keywords that are candidates for match (of which, "honda" is a candidate), look at your quality scores and bid and pick one. If all is equal, it ends up randomly selecting (I suspect it has to do with search volume, not really random). Therefore, you'll eventually end up with all your searches for "honda service" and "honda parts" being picked up by your generic branding term "honda". Thus, staggered bidding helps sift this out.
I'll stop here ... it's easy to turn this into a novel.