Musing on Major League Baseball and Used Cars Metrics

by dpollak on 08/17/2018 · 2 comments

A New York Times piece this week highlighted a couple trends in Major League Baseball that some find disturbing.

This year, for the first time in league history, there may be more strikeouts than hits through the course of a season. And, of the hits, home runs will account for a sizable share, perhaps more than ever before.

The problem for some fans is that these trends mean more waiting time between hits, and less overall action on the field. The game is less exciting, which may be a reason behind declining ticket sales at ballparks.

This state of affairs, the article suggests, owes to a greater reliance in clubhouses across the country on analytics and data to determine the players to put on the field, and how they play the game.

For pitchers, the data indicates the most efficient way to get an out, and avoid a run, is to strike out batters. In today’s game, this goal requires putting harder-throwing arms on the mound as starters and relievers. The piece quotes veteran players saying it’s harder to get a hit today than in years past.

For hitters, the most efficient way to score a run—no surprise—is to send the ball out of the park. Hence, more teams groom, and go after, players that possess what the current Oakland A’s manager calls “the patience and power profile.”

The article notes how Michael Lewis’ 2003 book, Moneyball, and its story of the Oakland A’s using data to find competitive advantage, has influenced the direction and course of the game. For example, beyond hitting and pitching, the prevalence of dramatic defensive position shifts owes to a data-based understanding of the precise spots where specific players are statistically most likely to hit the ball.

All this got me thinking about the car business. After all, Moneyball inspired the foundation of vAuto and the Velocity Method of Management.

I started to mull how data- and metrics-driven inventory management may have changed the game of retailing used vehicles.

My take-away: The outcome in used vehicles is almost exactly the opposite of big league baseball.

For one thing, you almost never see home run vehicles anymore. That’s the nature of today’s efficient market. Instead, the game is much, much more about scoring off a larger share of singles and doubles, and some triples—the kind of offense that’s less prevalent in baseball.

To be sure, there are still plenty of strike-outs in today’s used car game. But I don’t see much evidence that they’re on the way up. In fact, I suspect there are even fewer than ever before. Instead, I think it’s far more common for dealers to hit singles, or fly out, when they could have done better.

The article ends on an optimistic note, suggesting that, like always, the game of baseball, and those who coach and play it, will evolve. They’ll mine the data for more insights. They’ll find new ways to gain competitive advantage that may well make the games more exciting.

In this way, the used car business and baseball are exactly alike. There’s an equal desire to gain competitive advantage, and a keen understanding that your job, and livelihood, depends on it. There are also earnest efforts underway to mine data for greater understanding about the used car game, and how to play it better.

It makes me wonder. If baseball uses data to produce more hits, and more exciting games, will we see a day when dealers can hit more home runs?

  • Ryan

    Dale, neat contrast. Maybe we won’t see as many home runs of the traditional, swing-for-the-fences type (i.e. “stealing” a unit and retailing it with an unreasonably high gross). But we could see more inside-the-park home runs, where everything just clicks: we get a good bat on the ball (i.e. finding a desirable vehicle), there’s a lucky bounce off the wall (we acquire it at an attractive Cost to Market), the runner is fast enough to get around the bases (the sales team knows and shows the value of this unit), and perhaps the defense isn’t as sharp on the play (other dealers didn’t seize this opportunity). Each of these on their own might be a single or double, but all together they can put runs on the board. Just an idea to extend the analogy…

  • comentsection

    Good point Ryan. It’s like “Money Ball” and the book “The Boys On The Boat” crossed together. The Boys On The Boat is a story about the sport of Crew. In Rowing it’s all about the team, it’s about process, it’s about rhythm and psychology. If you are tired you must appear strong, if strong look tired, and with so many variables everyone has to be on the same page or the system breaks down. In baseball, crew, and business we all may employee “Money Ball” statistics to make the best decision but everyone on the team has to know where they are, where they want to go, and what the plan is to get there. They have to pull as a team in perfect harmony and that’s when you go from good to great.

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