In its coverage of the New York Auto Show this week, Automotive News picked up on a concept that’s long been familiar here—the benefits that the Velocity Method of Management® offers for dealers and their manufacturer partners.

bmw i8 roadster 300x200 Velocity Gains Notice—Next Stop, Your Sales ProcessThe coverage alluded to two points that are relevant to share:

First, velocity principles are coming quickly to new cars. Now, dealers have the on-the-ground competitive insights and market data to fashion fast-selling new vehicle inventories. There’s also a growing understanding that the “right” cars, coupled with more transparent pricing and promotion (as well as more credible trade-in evaluations and easier access to credit/financing information) will lead to a faster rate of sales.

Second, the traditional way of selling new or used vehicles—where customers effectively play a time-consuming game of ping pong with sales associates and managers to lock in the price of a car—needs a velocity-minded makeover. The Automotive News article quotes a TrueCar executive saying if dealers offer “a more efficient and more transparent process, people will actually come back and buy cars more frequently.”

I’m not sure that a more efficient sales process, in and of itself, will mean customers buy vehicles more frequently—especially with the financial strains many families still feel in their budgets. However, I completely agree that dealers who reinvent their sales processes to deliver vehicles in two hours or less will sell more cars and set the stage for repeat business better than those who don’t.



At a recent dealer group presentation, a used vehicle manager asked me an astute question:

“Dale, how can you tell when a used vehicle may need a price change?”

Alfa Romeo 8C Wallpaper 300x153 3 Indicators To Make Market Smart Used Vehicle Pricing DecisionsI liked the question because it suggested the manager was a thoughtful and proactive person—someone who doesn’t follow the more traditional set-it-and-forget-it practice for used vehicle pricing.

In answering the question, I shared the following three indicators that, when used together give dealers the best guidance to make used vehicle pricing decisions and retail every used vehicle for maximum profitability in the shortest amount of time:

1. Vehicle Details Page (VDP) performance: By now, most dealers and used vehicle managers can accurately define a VDP as the “look” a vehicle gets when a potential buyer clicks on an inventory listing to learn more about a specific car. Too few dealers, however, recognize the VDP as the “money metric”—the more VDPs a car gets, the better its chances to sell quickly and deliver the highest level of profitability.

If we assume a used vehicle is “right” for a dealer’s market, and it’s merchandised correctly and fully online, the vehicle’s daily VDP tally is an important indicator whether its price is resonating with potential buyers and the broader market. Some dealers carefully monitor a vehicle’s VDP counts and trendlines to help them determine if a price change is warranted. If the VDP views meet the minimum daily targets they expect to see, they may leave the price as-is; if the VDP exceed the targets, and they appear to be increasing, the dealers may adjust the price to reflect increased demand.

Both of these decisions, however, are contingent on a vehicle’s time in inventory.

2. Price To Market: This metric measures each vehicle’s price against identical, competing vehicles and their prices in a dealer’s market. Some dealers consider this their primary data point to craft their used vehicle pricing strategies and make subsequent pricing decisions on individual cars.

For example, it’s not uncommon for dealers to set Price to Market parameters for inventory age “buckets” (98 percent to 100 percent, 0-7 days; 94-97 percent, 7-15 days; 90-93 percent, 15-22 days; < 90 percent, 22-29 days). This approach recognizes two important fundamentals—fresh cars deliver the best gross profits, and time is often a used vehicle retailer’s worst enemy.

Dealers who use such Price to Market parameters fine-tune prices for individual cars within the individual “bucket” ranges. The key to success here, of course, is the degree of diligence a dealer or used vehicle manager applies to executing the Price To Market-guided strategy. Those who only price and re-price vehicles as they enter/leave an inventory age segment will inevitably leave gross profit on the table as vehicles don’t sell as quickly as they could. The most proficient dealers review used vehicle prices on a near-daily basis to keep pace with the current market.

3. Market Days Supply: This metric, which measures the sales rate and supply of identical used vehicles in a specific market, is most beneficial to dealers as they make the decision to acquire a vehicle. In an instant, the Market Days Supply tells them how much competition a specific used vehicle will face in their market.

The Market Days Supply also informs pricing decisions once dealers have acquired a vehicle. For example, vehicles with a high Market Days Supply (e.g., a greater level of competition) may see price adjustments that reflect the lower rungs of the inventory age “buckets” noted above. By definition, these vehicles aren’t as appealing and unique, hence the more aggressive pricing position.

Conversely, vehicles with a low Market Days Supply often deserve a higher Price to Market position. These are the in-demand cars that warrant more wishful asking prices.

I closed the pricing discussion by reiterating that these indicators work best when you’ve got the “right” cars for your market and they’re merchandised online correctly.

I also noted that when dealers have the “right” cars, and they diligently use these indicators to make used vehicle pricing decisions, good things start happening.

First, your used vehicles start to sell more quickly and, typically, generate better front-end gross profits. The market-based pricing strategy begins to fulfill its goals of retailing every used vehicle for maximum profitability in the least amount of time.

Second, you now have a market-based rationale to justify your asking prices with customers. In many cases, your “on the money” pricing means your sales team doesn’t have to justify anything—the buyer landed on your car because you priced it right.

And last, you’ve got a market-informed, scalable approach to pricing that can drive a “turn and earn” used vehicle inventory management strategy that drives improved performance and profitability in every dealership department.



A few months ago, I finished the biography of Abraham Lincoln, “Team of Rivals,” that inspired the award-winning movie, “Lincoln.”

The book struck me as more than just a masterfully written look back at one of our nation’s best presidents. In fact, I found “Team of Rivals” offered multiple lessons in leadership, revealed as Lincoln addressed ever-thornier challenges during his ascendancy to the presidency and the darkest hours of the Civil War.

One of Lincoln’s greatest challenges came from an assortment of generals who, in the heat of battle and beyond, proved to be ineffectual leaders. Their missteps and mistakes caused repeated setbacks for Lincoln’s goal of ending the Civil War and uniting the nation.

I th1940 continental Who’s The “General” At Your Dealership?ought of Lincoln’s struggles with top generals after talking with several dealers at the recent National Automobile Dealers Association (NADA) event about their current difficulties in used vehicles.

The dealers are in varying stages of implementing what I call the Velocity strategy for used vehicles—where market data and return on investment (ROI) are the chief guides for inventory management, pricing and merchandising decisions to maximize turn and profitability.

The dealers offered a variety of pain points—prices too high for the market, an inability to recondition cars quickly, persistent inventory age issues, too many appraisals that “bury” the car, too much discounting with customers, sloppy merchandising, difficulty finding the “right” inventory and others.

I asked these dealers what they would consider the No. 1 reason their dealerships weren’t able to work through these problems. The most common response: A lack of “buy-in” from key managers at the dealership, including the general manager or GM.

“I’m definitely losing my patience,” one dealer told me. “The reasons I get from GM sound an awful lot like excuses.”

That’s when Lincoln and “Team of Rivals” came to mind. The book notes that Lincoln sometimes faced direct resistance, if not insubordination, from top generals. It also highlights how Lincoln remained loyal toward these generals, even as they disappointed him with their performance.

I started wondering about the parallels between Lincoln’s generals and dealership managers charged with reinventing their used vehicle operations. To be sure, the challenges are different, but there are key similarities:

First, the terms of engagement are different. Today’s used vehicle buyers shop online and largely find the car they want before they get to the dealership. This shift has significant implications for the way dealers acquire, price, recondition and retail their used vehicle inventories. Yet, many dealership GMs and managers stick to what they know, which sinks their chances for the outcome their dealer expects.

Lincoln’s generals faced a similar challenge: Their conventional rank-and-file style of engagement was often ineffective against the guerilla and trench warfare tactics their Confederate counterparts employed.

Second, the little things matter a lot more than they used to. I often say, “there’s a thousand things a dealer has to get right on every used vehicle” to expect a profitable outcome. That’s not much of an overstatement considering the importance of getting the “right” car, reconditioning it, and then putting it online with quality photos, compelling descriptions and market-guided pricing. In this environment, it’s easy for dealership GMs and managers to get distracted, and focus on the wrong things, or lose their focus on the “turn and earn” strategy entirely.

For his part, Lincoln fretted on more than one occasion that a particular general lost sight of broader campaign strategy in the heat of battle, leaving an opportunity untaken or another Union force vulnerable.

Finally, the most-successful dealerships achieve higher levels of profitability and success only after they tear down silos, get all departments to work together and align every objective to maximizing the “total gross” of the dealership. In my latest book, Velocity Overdrive: The Road to Reinvention, I describe how the used vehicle department functions as the hub of a “wheel of fortune” that can lift sales and profitability across the entire dealership. It is difficult for some GMs and managers to shed their backgrounds and biases toward a particular department and embrace this “total gross” management mindset.

Lincoln also struggled to achieve harmony among his generals. Eventually, though, he appointed Gen. Ulysses S. Grant to command all Union forces. Together with other generals, Lincoln and Grant aligned Union forces under a strategy that simultaneously engaged Confederate troops and cut off their supplies. The strategy ultimately resulted in Confederate General Robert E. Lee surrendering to Grant at Appomattox Court House.

I liked how one dealer at NADA digested the comparisons I made between Lincoln’s struggles with his generals and the difficulties dealers encounter as they transform their used vehicle operations: “I need to be more like Lincoln, and my GM needs to be more like General Grant.”

“Bingo,” I said.



Take-Aways From a Talk Radio Interview On “No Haggle” Retailing


I had the honor of taking part in a program for Cars, Trucks and Bucks, an online talk radio show hosted by former Chicago Tribune automotive writer Rick Popely, who also writes for and other auto-related outlets. The show’s featured guest was dealer Larry Mullinax, of Mullinax Ford, New Smyrna Beach, Fla. Larry is [...]

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What’s Wrong With This Picture?


Following a debate-like exchange the other day with a few industry players about the state of today’s new car market, I did a quick search on My goal was to see whether my assumption—that the way dealers price and promote new vehicles today doesn’t do the dealers, the factories or buyers any favors—is true. [...]

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An Apology, An Insight And A Touch of Humor


My phone started ringing around 8 a.m. CST this morning. A technical bug caused an extremely rare outage of vAuto’s system. Our vAuto team scrambled, getting people out of bed and off the golf course to make the necessary fixes. We had the system largely restored in about two hours. Of course, as temporary as [...]

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Marketing Guru Seth Godin Affirms Velocity Management Principles


A hat-tip to Velocity dealer CJ Romig of Motor Werks of Barrington, Ill: His “tweet” earlier today brought my attention to a blog post from Seth Godin on “The rotten fish problem.” Godin’s post is worth the quick read. It succinctly underscores how/why rotten fish, like aging used cars, ultimately undermine a retailer’s profit and [...]

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7 Rules To Recondition Used Vehicles “Right” Every Time


I like the way the general manager of a Chevrolet dealership in upstate New York thinks about used vehicle reconditioning. “It’s just as important in terms of gross profit as working the deal in the front of the store,” the GM says. “I know that may sound crazy but I really believe it. The faster [...]

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Two Traditional Management Practices That Undermine Used Vehicle Potential


I’ve long advocated that dealers need to recognize the primacy of the used vehicle department as an engine of growth for sales volumes and profitability across the entire dealership. As a dealer friend puts it, “the used vehicle department is the only department that touches every part of the dealership. Once we understood this, it [...]

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E-Commerce Update: “Self-Service” Auto Financing In Five Years?


I had a fascinating conversation the other day with Pete Radike, director of product management for Fiserv, a Wisconsin-based company that processes and services vehicle leases and loans on behalf of captive and indirect lender partners. I’d called him after seeing a report last week about Toyota Financial’s success in the past year using a [...]

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