By Izzy Alpert, CEO of EZ360
Welcome to It’s EZ with Izzy. This is my first blog article. So be gentle with me!
First, let me admit upfront that I am biased, incentivized and motivated. But it’s actually a good thing. Publishing my thoughts in black and white on this page requires me to be more cautious, balanced and worthy of your attention. So, please, bear with me. Feel feel to comment in the social media where you see this article or contact me directly. Sharp criticism is welcome. In fact, it’s very welcome simply because that’s the only way I/we can become better.
You cannot live without vAuto. The days of setting prices from your gut are over. With the exception of very few exotic, vintage or specially equipped vehicles, no dealer can rely (for the long term) on intuition … I-know-my-market-better … or let’s-put-the-highest-price-first-and-negotiate-later.
Carvana, CarMax and similar operations put the end to it. Money talks. If you price a vehicle too high, nobody will buy it. If you buy it too low … mmm … one can always win back his losses, right?
So, it doesn’t matter if you use vAuto, AIX, Dealer Socket or any other IMS out there. All dealers rely on some sort of IMS when they price the trade-in, buy it at auction, and publish their vehicles for sale. Of course, you don’t need vAuto to price your NEW vehicles. But if you are one of the (very few) dealers that make most of their profit from selling new cars you won’t be reading these words, right?
It would be so simple if everybody would nod his head, raise his thumb up and move on. But I am sure many of you just gave me a mental eye-rolling, something like “If you’d just knew how often vAuto is wrong !” And you are right too! vAuto (and similar IMS) are “always right and never right on the money”. They just collect vast amounts of information from public sources about sold vehicle prices and provide the dealers with the highest, mean and lowest pricing.
Savvy dealers know their market well. They may choose to modify the suggested price. But no dealer can keep the vehicle in inventory, indefinitely, until it’s sold at the initial price.
In fact all dealers try to mark the vehicle as high as possible (or close to it). They lower the price if the vehicle is not sold within the first 2-3 weeks … and lower it again if necessary. Bottom line: If you sold the vehicle at Tier 1 pricing – lucky you! Tier 2? Not so bad.
Tier 3 … mmm .. you better hope it won’t happen on the next deal you close. Those dealers who end up sending a significant portion of their inventory back to auction will soon realize that gambling in Las Vegas is a better option. …. And should stop reading now!
In my next article I’ll share a second thing car and truck dealers can’t live without.