Used Car Volatility Index... someone needs to build this

[joe.pistell]

Many industries use wholesale price changes to re-price current inventory. Example:

• Old School: Gas stations set prices based on observing their competitors.
• New School: Gas Station retail price strategies are aware of today's gasoline wholesale prices (incl.'ing volatility and trend).

Gas stations turn inventory in 3-10 days. I watch prices change daily. Clearly they're factoring in the 'cost to replace'. Car Dealers turn every 60-ish days. This 60day lag (from date of buy to date of sale) makes 'cost to replace' significantly more important.

--Car Dealers--
Old School: Price to Market = car dealers set prices based on observing their competitors.
New School: Car dealer's retail price strategies are based on today's wholesale prices.

Actually, the new school pricing strat should add data for both supply and demand. It should pull in today's wholesale prices AND the TREND of the wholesale prices (see chart), and retail traffic stats from internet shoppers (marketplace & dealer's site). Almost new Used autos need to be aware of new car prices, supply and incentives.

No wonder Wall Street struggles to disrupt our industry
Just some coffee thoughts from Uncle Joe

 

[joe.pistell]

How the Wholesale price TREND should influence decision making.

Look at that Manheim chart above. If wholesale price is rising, then age is of little concern as the cost to replace will be equal or higher, but, if price is falling, then operations are stressed as FASTER turns keeps you buying new units at lower prices than your competitors. Here's a snippet for an article I wrote for Dale Pollak 14 mutha fuggin years ago.

IF THE WHOLESALE TREND IS DOWN (the used car market is in doubt)
#1). *Buy Side. Patience, Patience, Patience. Buying below market is far easier, so don’t chase units at auction, we’ll buy it for less soon enough.
#2). *Sell Side. Age is the enemy of margins, in this selling environment; operations have to be razor sharp. Take the short deal…. CASH IS KING.

*Buy Side = all the efforts & techniques related to acquiring inventory.
*Sell Side = all the efforts & techniques related to selling inventory.

A pricing algo that is unaware of PRICE TREND is weak sauce.
https://www.dalepollak.com/2008/10/manheims-used-vehicle-index/

 

[corbindaquino]

Very interesting... maybe an app that can track this data and suggest accurate wholesale prices?