What should dealers do to navigate through this inventory imbalance? On today’s show we’re pleased to welcome Randy Kobat, Vice President of Operations for Inventory Management Solutions at Cox Automotive, to give us a Q2 recap on the used car and wholesale market, sales, and pricing and we’ll also get his perspective on the market’s changes.
Q2 was a crazy time in our marketplace says Kobat. He says it was the first time in history that prices for wholesale went up and at the same time appraisal value of cars went up also. Depreciating assets is not something we had to manage in the past.
| Related: What’s the reason behind fluctuating wholesale values? |
According to NADA, in April 2021, dealers averaged $807 in net profit per used vehicle retailed. In May 2021, dealers averaged $993 in net profit per used vehicle retailed. There are no doubt dealers are making record profits. Kobat says, one thing that’s interesting is dealers that are leveraging technology from ProfitTime are doing even better. They are pricing vehicles based on investment value.
You make money when you buy the car, not when you sell the car. Kobat says they are trying to help their clients do a better job of value creation rather than valuation when they’re appraising cars. This allows them to match strategy to action and outcomes.
Kobat says when you’re hungry for inventory, it’s important to know how many cars did you capture and how many did you walk away from that may have been able to be purchased for a few hundred dollars.
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