Used cars have never been more popular, rare or expensive.
As a result, the average price of used vehicles has risen 42% over the past two years and now costs nearly $30,000, according to a report from industry pricing platform Kelley Blue Book.
Add to this an unprecedented rate of online shopping – both at the wholesale and retail level – and the pace of transactions and increasingly high stakes involved create a stressful and full of risks.
“Acquiring inventory is the #1 challenge facing dealerships today and will be for some time to come,” Dale Pollackfounder of vAuto and executive vice president of parent company Cox Automotive, said in a Press releasenoting how high costs and tight supply have forced dealers to adopt a “buy anywhere” approach when trying to acquire vehicles outside of their traditional auction and exchange channels.
“The problem is that this pivot places appraisers and dealership buyers in uncharted territory,” he added in the statement. “They must now acquire cars through more supply channels, where the opportunities and risks are different, at a time when the market will not forgive buying the wrong car or paying too much.”
Dealers dive into data
Whether it’s digital auto retailers like CarMax or Carvana, or manufacturer efforts — like the CarBravo unit launched by General Motors last month — the way we shop for cars and buy them has changed during the pandemic and shouldn’t go back to the old ways.
Read more: GM launches online used car marketplace
Studies have shown that the flexibility of having no constraints on store hours and no pressure haggling within the dealership over price has made the digital buying experience for cars and trucks the preferred choice of many consumers.
Against this backdrop, Cox Automotive said its data science team has developed and has just launched what it calls in the release “the industry’s first multi-channel inventory procurement system,” which allows dealers to go beyond auctions and inventory exchanges.
“[The Global Acquisition platform uses] data-driven insights into each vehicle’s investment value to recommend an acquisition price and an asking retail price at the time of appraisal,” the statement said, noting the system’s goal of helping dealerships to strategize, analyze and optimize their used vehicle acquisitions profitably across multiple channels.
According to some of Cox Automotive’s 40,000 dealer customers who have already started using the new pricing platform, better data helps them get more accurate ratings while helping dealers focus on where to acquire vehicles.
“We know we have to be aggressive if we’re buying on the street, and Global Acquisition is helping,” Kelly Summers, general manager of Bill Knight Ford in Tulsa, said in the statement.
“You can’t do anything to a car if you don’t buy it first and buy it right,” Beaverton Honda general manager Tim Nelson added in the statement.
The new platform will officially launch in March at the NADA convention in Las Vegas, but it’s already being piloted and honed on the front lines by dealers struggling to intelligently build inventory to meet consumer demand.
“As we’ve always said, ‘You make money when you buy a car, not when you sell it,'” said Randy Kobat, vice president of inventory management solutions at Cox Automotive.