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The Race to the Top then Race to the Bottom! What a vicious cycle!

There are used vehicle stocking tools on the market today that are predominantly based on market driven analytics.  A fundamental flaw and conflict of interest, is that by using these recommendations, they are telling all their dealers in the same market to go target the same vehicles at auction.  Since at least one of these companies is owned by the largest automotive auction house in the country, it is easy to understand why they'd be advising to buy these recommended vehicles at auction. Can you imagine what this does to the price of these vehicles in a local market or even online?  The auction prices are inflated by $1200-1500 on average. Once the dealer gets these units back to his lot and list them on sites like AutoTrader the strategy is  to price them lower than anyone else in the market.

So how do you think this strategy is going to work for these dealers on a long term basis?  Let's have a race to pay the most for vehicles at auctions and then have a race to price them lower than anyone else in the market once we get them back to the lot.  Does anyone else see this dilemma?  Retailing is hard enough.  Finding the right inventory is usually the most difficult challenge.  The last thing dealers need to be doing is realizing continuing shrinking used car gross.  It's difficult enough making gross on the new car side.  My fear is that the cycle many dealers are on these days is a one-way street to a really dark alley..

 

Views: 84

Tags: Bruce, Thompson

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