Every week David Long and the All Things Used Cars community talk about the market from a different angle. The conversation allows people across the industry to speak about what they see in their part of the world and share things working in their market.
This week Dale Pollack gave a brief but insightful mic-drop urging folks to remember the used-car business is still essential and offered some guiding principles to keep in mind.
Number 1. Make sure your current inventory is in line with your current 30-day sales. We are in an accelerated depreciating market. Dealers sticking to a rolling 30-day supply are at a tremendous advantage because they can replace, price, and move inventory as the market declines.
Coming back around? Dale reminded us that one our favorite Cox Automotive economists, Jonathan Smoke, suggests Q1 and Q2 will continue to depreciate. Getting on the right side of that advantage equation and maintaining the position will reduce the distance between buy and sell, thus reducing the time a car depreciates value in your inventory.
Don't deceive yourself. More inventory may mean more sales, but more sales do not mean more profit. Additionally, tracking only gross misses the story. Net profit tells how your inventory strategy is working.
TL; DR - Tesla says their Chinese sales are aok, and you should mind your business. Carvana should mind its business, but, like, in a ‘get things in order’ kinda way, and the used car business is seeing an influx of exotic cars as Crypto investors face a time “between prosperity.”