'Velocity': Change Sweeps Through Nation's Used Car Markets

DETROIT, Jan. 15 /PRNewswire/ -- Digital technology is dramatically
changing the way used cars are bought and sold.
(Photo: http://www.newscom.com/cgi-bin/prnh/20080115/CLTU019 )
In his new book, "Velocity: From the Front Line to the Bottom Line," Dale
Pollak challenges common assumptions about today's used car market and
describes major changes that have swept the industry. A high-tech
entrepreneur, used car authority and former dealer, Pollak believes that used
vehicle buyers are ahead of the game in today's marketplace.
"Consumers are no longer the losers when it comes to buying a used car or
light truck," Pollak notes. "The new losers are dealers who have failed to
understand the dynamics of today's Internet-driven market."
More than 80 percent of all used car buyers currently shop on the Internet
before making a final decision, according to Cars.com. Another popular site
where nearly 45,000 dealers list used car inventories, AutoTrader.com, reports
more than 12 million visitors a month.
"Most dealerships still operate from a decades-old play book when managing
their used car business," Pollak says. "They need to adopt a more disciplined,
investment-minded approach."
The market for used vehicles is becoming a commodities market thanks to
Internet-savvy shoppers. "Buyers have a multitude of choices and prices are
easy to find," Pollak explains. "Vehicles aren't as unique as they used to be,
no matter what some dealers would like to believe."
Pollak's book warns that a "perfect storm" is brewing in the used car
business. Although used vehicle inventories are the largest single asset
outside of property and facilities at most dealerships, the used car business
historically has occupied "stepchild" status with most car companies and their
dealers.
In the past, vehicle manufacturers trained their dealers to focus on new
vehicle sales and in fact most franchised dealers prefer to sell new cars and
trucks. To compound the problem, factory-provided dealership financial
statements basically de-emphasize a dealer's used vehicle business assets.
In addition, new vehicle sales incentives, lease-car and factory buy-back
programs, overproduction and a proliferation of domestic and import models
have combined to squeeze the profitability of dealership used vehicle
operations.
"Factory efforts to pump up new vehicle demand through sometimes insane
amounts of incentive money have had a disastrous impact on many used vehicle
sales departments," Pollak points out.
For nearly 100 years, dealers and used-vehicle managers have used unit
sales, vehicle age-in-inventory and gross profit to benchmark performance. "In
today's marketplace, those metrics are crude and unreliable," Pollak adds.
"They don't tell the full story behind a used vehicle business operation."
There's good news, however, for consumers and dealers alike. To remain
profitable, used vehicle managers are boosting profits by turning inventory
more quickly and pricing their vehicles based on actual market value. More and
more dealers are offering buy-back guarantees, warranty protection and
vehicle-history reports.
Pollak adds that now, for the first time, dealers and car makers also have
the ability to obtain accurate used car supply-and-demand information for
specific markets and regions.
"Velocity: From the Front Line to the Bottom Line," is available at
Amazon.com and considered a "must" read for the nation's more than 60,000
franchised and independent used vehicle dealers and their sales personnel,
according to vAuto President and CEO Keith Jezek.
Five out of the nation's six highest volume franchised dealerships by
brand, including Ford, Honda, Nissan, Lincoln-Mercury and Toyota use pricing
and appraisal strategies supported by vAuto software solutions. Virtually
every imported and domestic vehicle brand is represented within vAuto's
customer list, including Acura, Audi, BMW, Hyundai, Infinity, Kia, Lexus,
Mercedes and Porsche, as well as all Chrysler and General Motors brands.
Dale Pollak is the founder and chairman of vAuto, Inc. vAuto provides the
auto industry's only "live" analysis of used vehicle markets, supplying
dealerships with up-to-the-minute information about used vehicle supply,
demand and pricing in their specific markets. Headquartered in the Chicago
suburb of Oakbrook Terrace, the company also maintains a research and
development center in Austin, Texas. More information is available on the
Internet at www.vAuto.com.
SOURCE AutoCom Associates

Larry Weis, lweis@usautocom.com, or Christina Eckl, ceckl@usautocom.com, both
of AutoCom Associates, +1-248-647-8621