David Long and the All Things Used Cars community have celebrated one year on Clubhouse. The congregation of automotive dealers, industry partners, and various specialists shared a wealth of knowledge regarding the used car business over the last 52 episodes. David Long has been instrumental in pushing the industry to look at acquiring inventory from a myriad of channels. We wanted to break down some of the acquisition sources explored over the last 12 months. David was kind enough to give us his perspective.
What does diversifying your acquisition strategy mean to your bottom line?
"Diversifying is great as long as you're the best end user."
You can diversify yourself out of business. If you diversify beyond your market demand and sales history, you will spread yourself too thin. You can try things outside your sales history, but you can't outperform a low market demand. Stay in your wheelhouse.
How do you decide where the next good diversification is without leaving your wheelhouse?
"Imagine going ice fishing. You'd check the ice every step."
David described a process by which data comes first, like crossing an untested frozen lake. Think of checking the market data first as poking the ice with your fishing rod. If there is a data-backed high probability of a vehicle doing well in the market, you take the next step and see if the ice supports you.
David continues the frozen lake metaphor to help explain how many layers there are to the diversifying well. He said interest in the same three vehicles depends on trim levels, color, or other features. Sometimes it isn't the wrong car, but the wrong part of the lake.
Market research such as studying searches and clicks must cross reference experience. Knowing a type of vehicle is in demand from market history has to be compared to what did and did not work for your store when you tried that vehicle type in the past.
"I am addicted to data. I love gathering data from 100 sources and seeing what they mean. I feel like a scientist!"
Where have you seen the most success in purchasing used cars over the last 3-4 months?
"Facebook marketplace is what I see working for most of the Buy Centers I support."
Facebook marketplace has become the primary source for the locations David's training consulting business supports. Craigslist is still a go-to, but he said a tool like Vehicle Acquisition Network (VAN) is the gasoline to the fire either way.
How would you explain the appeal of being good at acquiring used cars to somebody with no experience?
"If you buy a car from a private party and treat them right with a great experience, you possibly have a customer for life. Somebody you would have never met otherwise."
If you bought a car from an auction, you don't know where it came from and made no connection to the previous owner. Long said he hopes to give people such a great experience selling him their car that even seeing his green "H" logo - they have fond feelings of his company.
What do you see coming up for used acquisitions?
David used the recent news regarding Carvana to set up his answer, sharing that he never roots for a business to crash or people to suffer. With things getting rocky on Carvana's side, David says the one million cars they buy a year will be more open to competition.
How do people prepare for that change?
"Simplify, simplify, simplify, and call David Long Consulting Company."
Make the process simple and do the opposite of what the car business has been doing for 100 years. He said trying to modify a broken process is like putting perfume on a pig; it's still going to stink.
Along with David Long, franchise auto dealers across the country are becoming better and better at used car management. The reality that inventory shortages will continue to be a challenge through the end of 2022 is pushing dealerships to control what they can control. Used inventory acquisition is an important part of a well rounded strategy. Finding new and unique ways to acquire inventory will be a continued part of the All Things Used Cars discussion. Join David and a host of incredible operators on Clubhouse each week as we discuss real time strategies and market dynamics that will keep you ahead of the competition.