Watch VinCue Accelerate LIVE: A Dealer Roundtable All About Appraisals

Every used car manager appraises inventory differently, and usually they believe their way is the best way. From book vs. market data to inventory management algorithms, when you learn how one person appraises a vehicle, you’ve only learned exactly one way to appraise a vehicle.

Moderated by Danny Zaslavsky, Managing Parter at VinCue and General Manager at Country Hill Motors, this live panel of real-life dealers share their strategies, secrets, and horror stories from making inventory appraisals.

Transcript

Danny Zaslavsky:

Good afternoon. My name is Danny with VinCue and Country Hill Motors, and you’re joining us for a very special VinCue Accelerate. So we’re going to be talking all things appraisals today and we have a lot of experience around the table. So we’ll go around here and make some introductions, but the gist of this is today we appraise differently than I even appraised two years ago, three years ago, five years ago. And it continues to evolve because data becomes sharper, the market continues to change, how we merchandise cars changes, the algorithms in which third parties accept our inventory changes, the laxity or the complexity to which dealers actually merchandise their vehicles, and how we do comps is a moving target. So we’re going to put that to the test today. We have a lot of cool people around the table. And with that, Nicki, can I start with you?

Nicki Hodges:

Yeah, absolutely. Hi. I’m Nicki Hodges. I’m Director of Operations at VinCue. I don’t have retail experience but I’ve been around these corridors long enough to… It feels like I have my own appraisal experience. So I’m here to just kind of be a nerd behind the curtain.

Danny Zaslavsky:

Love it. So we’ll speak to the data once we start doing appraisals.

Dan Riggs:

Dan Riggs. I’m a performance manager, and I’ve been in the automotive business for 14 years, primarily on the retail side with Ford stores.

Brian Holt:

My name’s Brian/ I’ve 15 years in the used car business from national chains to an independent auto group here in Kansas City so…

Danny Zaslavsky:

All right. Cool.

John Massey:

My name’s John and I’m the automotive software trainer here at VinCue.

Joe Reck:

Hi, my name’s Joe Reck. I’ve got about 30 years in the industry. I’ve done wholesale retail, parts, service, and I feel like I’ve been around the block and got some history.

Robbie Anderson:

My name’s Robbie Anderson, six years on the retail side and 10 years with different vendors for the last 10 years.

Tony Hart:

And I’m Tony Hart, a used car dealer in Rosedale, California. We’re a medium sized operation. We sell about 70-80 used cars a month.

Danny Zaslavsky:

Cool. Yeah. And my name’s Danny and I’ll be using some of my inventory as well to talk about how we do appraisals. So let’s kind of start with having some discussion first before we jump into cars. Can I get a quick understanding? Brian, what did you use for a market pricing tool when you were running your stores?

Danny Zaslavsky:

Okay. And so when you were doing appraisals, if you had to put an algorithm to what information you look at when you’re appraising a car, can you kind of spout out what would you look at first and why? How would you arrive to a number?

Brian Holt:

Okay, so I think the biggest thing I’m looking at is the car for what it is. The colors, condition, how much of that inventory is available out there, and the demand for it.

Danny Zaslavsky:

Yep.

Brian Holt:

I’m also looking at what they’re transacting on the wholesale environment, which in this day is quite a bit different than what it used to be, where it’d be several of these to choose from, now this is the one so if you want this one, you got to go after it.

Danny Zaslavsky:

So what I heard you say is you looked at the attributes of the vehicle and then you went to wholesale. And from there you were able to get an ACV?

Brian Holt:

Yes.

Danny Zaslavsky:

Cool. All right. Joe, what about you?

Joe Reck:

Pretty similar to what Brian does. I was using AAX and DealerSocket and some other tools out there over the years. It’s putting my hands on the car, test driving it, figuring out what it needs, and then coming back in and looking at what the market’s at, looking at those key attributes that I know is important on the vehicle to retail it and to market it, and then putting a price based on what’s going on in the market.

Danny Zaslavsky:

Cool.

Robbie Anderson:

We use VinSolutions quite a bit. The big thing I always look for too is an exit strategy, kind of how fast I would sell a car and how fast I could get out of it, so retail price was big for me as well.

Danny Zaslavsky:

Okay. Dan?

Dan Riggs:

I was part of an automotive group so it was a case where we would look at a particular vehicle and see where it would fit within one of our stores, so we could buy it for our store or we could buy it for another store.

Danny Zaslavsky:

Interesting.

Dan Riggs:

And then we can send it around because we always had customers who were saying, “Well, I live about an hour away.” And we’d say, “Hey, we got it at our store. It’s an hour away.” So I’d look at maneuverability to be able to put that vehicle in [crosstalk 00:04:48].

Danny Zaslavsky:

So it was almost not just a market appraisal but also an inter-store appraisal.

Dan Riggs:

Right.

Danny Zaslavsky:

Okay.

Dan Riggs:

It helped us keep our inventory fresh and moving.

Danny Zaslavsky:

Got it. Cool. Tony?

Tony Hart:

I think I do things similar to the first gentleman that spoke with looking at the vehicle, the market. I look heavily at reconditioning because that’s a big factor in profitability. And then I think the other thing that I used to use with… I used [inaudible 00:05:14] as well, was the price to market. I used that pretty heavily to find out being at 100%, gauging. I don’t want to be too high in the market, and I don’t want to be too low. So I looked at that as well.

Danny Zaslavsky:

Yeah. So let’s dig in deeper. So I have three cars here we’re going to be appraising here in a little bit. We’ve got an SUV, an everyday car, and then we got an expensive car, something that is going to be kind of tricky to appraise. So we’re going to do that. An exercise that somebody once shared with me that is really helpful in a store, is to give some appraisals to your team members. Right? Your sales to your desk and see how you all land.

Danny Zaslavsky:

It’s an interesting way because you can leave money on the table. Right? And kind of understanding what are we looking at. Some of us look at wholesale transactions. Some of us look at retail transactions, history, attributes, intuition, these are all things that drive a number for the car, and we know once that gavel is dropped, that thing goes into our dealership machine, gets [recond 00:06:19], gets merchandised, and then gets out online. And ultimately everybody that touches it afterwards, other than the very last person that sells it, is getting paid. And so we got to make sure that that car was a good decision to buy, right? Because making money [inaudible 00:06:40].

Danny Zaslavsky:

So let’s start with the appraisal for a second. So Brian, you were talking… or actually Tony, I want to talk to you first. You were talking about price to market, cost to market. In your head, when you were appraising back then, what do you think that price to market, cost to market, what was the algorithm behind it that you perceived was happening?

Tony Hart:

Well, the algorithm that I perceived was taught to me by [vAuto 00:07:07] and that was if you’ve got a car there’s a lot of in the market, you need to be in the low percentage of 94%, move that car, low profit, get it on the road. More desirable, less inventory car, where there’s less out there you’re edging up towards 100%. And if you get something real rare, you might get up 103-105% percent. That’s how it used to be.

Danny Zaslavsky:

That’s how you used to do it. Okay, cool. Anybody else have anything to add on that? Did you guys lean on price to market, cost to market.

Brian Holt:

Yeah, I’d say that’s pretty consistent. I mean, I think that’s pretty much the way it’s taught to you.

Danny Zaslavsky:

Cool. And so was that a leading indicator or a lagging indicator, meaning was that the first thing you went to or was it the last thing you went to when doing an appraisal. Did you go in and immediately a percent of market and see where everything lands? Or did you look at something else first?

Brian Holt:

No, I looked at the data first and then I use that as kind of a guide to help kind of either reaffirm where I’m at or help influence where I should be on the car.

Danny Zaslavsky:

Got you. Cool. Good stuff. Okay, so we’re going to do some appraisals, if that’s okay. Nicki, do you mind if we use your screen to share?

Nicki Hodges:

Not at all.

Danny Zaslavsky:

Okay, cool. So if you would, you’re in the… Are you in the meeting?

Nicki Hodges:

Yes.

Danny Zaslavsky:

Okay and let me see if I can… Actually, let me just do this.

Danny Zaslavsky:

Okay. I’m just going to do it from my screen here and let’s go first to… Let’s snag a VIN number here.

Danny Zaslavsky:

Okay, we’re going to do this as a new appraisal. So we’ll do this together. 2018 Chevy Tahoe LS. Let’s create a new appraisal. And…

Nicki Hodges:

[inaudible 00:09:23].

Danny Zaslavsky:

Uh-huh (affirmative). And we’re at 49,965 on miles and actually, if you want to unplug it I’ll do that.

Nicki Hodges:

Okay.

Danny Zaslavsky:

Because I’m sharing on… You’re good. Okay. So here we are. So let’s start with Tony. Tony, what’s the first thing you want me to do when appraising this car? And keep in mind, Tony, you’re, just to be clear, what market are you in?

Tony Hart:

Northern California.

Danny Zaslavsky:

Okay.

Tony Hart:

Sacramento.

Danny Zaslavsky:

Got it [crosstalk 00:10:01]. And so right now, we’re looking at data from Kansas City because we’re in… If we go over to the [inaudible 00:10:08] filter, our center zip code at the moment is 66202, but we can change that center zip code to yours because that obviously changes the value of the car.

Tony Hart:

Yeah, I can look at it [inaudible 00:10:21]. I think the first thing that you… You asked what I look at?

Danny Zaslavsky:

Yep.

Tony Hart:

I look at distance. I want to know how many cars are in my immediate market and from that right there, there’s not a lot. The closest car is 169 miles away.

Danny Zaslavsky:

Mm-hmm (affirmative).

Tony Hart:

So with that, I know that maybe I have a unique car and that leads me to think if I’ve got the right hook this might be a really good purchase for my site, for my dealership.

Danny Zaslavsky:

Cool. So scarcity.

Tony Hart:

Scarcity.

Danny Zaslavsky:

Is the first thing you look at. I like it. What’s the next thing you look at?

Tony Hart:

I look up at the turn, you’ve got a turn, so I know that cars are moving and obviously, you can go over and look in the sales tab as well to see what they’re selling at, and I might look there and see what 50,000 mile Tahoes are selling for. Although, I would go back to the vehicle and I would select the four wheel drive because I know this is a four wheel drive vehicle for a fact and I don’t want to compare to two wheel, because in that market that will kill you.

Danny Zaslavsky:

Okay, so I just locked in four wheel drive and it looks like… Is that right? [crosstalk 00:11:20]. Sorry about that. And…

Tony Hart:

There you go.

Danny Zaslavsky:

[inaudible 00:11:26] keep it locked or no?

Tony Hart:

Keep it locked.

Danny Zaslavsky:

Okay.

Tony Hart:

Yep, because we’re only going to compare to four wheel drives [inaudible 00:11:30].

Danny Zaslavsky:

Which is a $1,200.00 add, looks like. So okay.

Tony Hart:

Yeah, and then from there I look at those prices, $44,000.00, $44,000.00, $47,000.00. I like the historical prices because that tells me, especially in today’s market, where their heads are at and it looks like $47,000.00 to $49,000.00 to $47,000.00, $43,000.00 to $44,000.00 to $47,000.00. People are kind of a little all over the place. They’re certainly not dropping like crazy, so from there I’m going to try and put a price on this vehicle and I look at color. And I know that those other two are black, they’re probably a better color than burgundy.

Danny Zaslavsky:

Okay.

Tony Hart:

And then I’m going to try to price myself right to market and I might… I’ve got the highest mileage one and I know these big SUVs as they get closer to that powertrain warranty being expired, they get to be expensive to fix and people don’t like buying them. And then I’m just going to look at the retail pricing and try to fall in that, and that’s where I’m going plug in upping the price.

Danny Zaslavsky:

Perfect.

Tony Hart:

So I’m going to pick my price out of the gate and see what I think it’s worth.

Danny Zaslavsky:

So let’s jump… You said something that… So far I’m just taking notes while you’re talking, you look at scarcity first, then you look at similars and solds, right?

Tony Hart:

Mm-hmm (affirmative).

Danny Zaslavsky:

And then meanwhile you’re also looking at attributes of the vehicle. So here we are in similars and solds and it looks like these cars are living online about 40 days. Our car’s got 50,000 miles, so let’s sort just for a second by miles so we can get into that range. Here we are and we can see how long cars in that mileage range-

Tony Hart:

I always look at that as well.

Danny Zaslavsky:

… Okay, so that’s interesting because the car may live online for 40 days however, cars in that 50,000 mileage range are actually moving faster. There’s a couple that looked old, but the other ones are moving six days, four days, 28 days, 19 days, 21 days, three days, 21 days, and then there’s a few that look like they’ve stuck around. So what insights are you gaining here?

Tony Hart:

So the one thing I would do is… So the [Garyln 00:13:29] [Shelton 00:13:29] Volkswagen, that’s a two wheel drive so I know I’m not comparing a similar vehicle.

Danny Zaslavsky:

Okay.

Tony Hart:

So I’m going to kind of weed that out myself as I look at it.

Danny Zaslavsky:

Okay.

Tony Hart:

But I know that, that mileage probably represents a better price point to consumers to get into that.

Danny Zaslavsky:

Yep.

Tony Hart:

And so I’m going to run after some four wheel drives and you see some are like $42,000.00, $42,500.00, and some of the other ones I have to question whether these are four wheel drives at $38,000.00, $39,000.00.

Danny Zaslavsky:

Yep.

Tony Hart:

And then I’m probably going to set my price $43,000.00 and change.

Danny Zaslavsky:

Okay, so you’re at $43,000.00 is your retail and what’s your ACV on this car?

Tony Hart:

Well, I go back and I just make sure my recon is right, that’s always a big factor.

Danny Zaslavsky:

Okay.

Tony Hart:

So retail price at $43,000.00, go ahead and put it at $42,599.00 let’s just say.

Danny Zaslavsky:

Okay.

Tony Hart:

After look at that.

Danny Zaslavsky:

And your ACV?

Tony Hart:

Put the recon in at… Well, let’s say I know that this is a clean car, it’s $500.00 is all in, and then I’m going to put my profit about $3,800.00. I want to see if what I’m going to make on that car is $3,800.00. Okay, so I’m going to need about $39,200.00, that’s going to be my ACV. I kind of work backwards to the ACV.

Danny Zaslavsky:

Okay, so I got to point something out. We did not talk… In your process, you didn’t mention cost to market, price to market a single time while we were going through this. So essentially, you went from scarcity, to similars and solds, attributes, and then ACV to price the car, and now we see we’re at 95% of the market, which is strong on that car, and a cost to market at 88%.

Tony Hart:

So for me, I think that’s right in my neck of the woods, although I probably could be a little more… I mean, I’ve never… I always miss a car, appraising one, and then finding that maybe I could have paid more, but in my market that color just does not work. Although, I am at the base of the foothills and it is four wheel drive, so when I see that final number at 95% I might edge up a little.

Danny Zaslavsky:

Yep.

Tony Hart:

I do look at the graph as well up here on the right, I like that.

Danny Zaslavsky:

Okay.

Tony Hart:

Because that’s your scatter of where they’re trying to price and I feel like I’m kind of in the mix there, so I’m not super high, and those high [inaudible 00:15:37] don’t really affect me too much.

Danny Zaslavsky:

Cool. So what you didn’t do in this process is we didn’t look at wholesale comps, is that something that you look at on a regular basis or no?

Tony Hart:

No, to be honest, I do look at wholesale and [MMRs 00:15:53] when I appraise cars off the street because that’s typically how the people that I’m bidding against, CarMax, et cetera are deriving their numbers.

Danny Zaslavsky:

Got it, so you did to kind of cross… cross intelligence there.

Tony Hart:

Yes.

Danny Zaslavsky:

Okay. So let’s go in… So I feel like a magician because, Tony, do you swear that you’ve never seen my actual appraisal on this car?

Tony Hart:

I have not. [crosstalk 00:16:18].

Danny Zaslavsky:

33420, so let’s look at it actually because I sold this car recently. And again, I’m in a different market than you are right. So we’re going to do this a couple of times. And so here’s how I bought the car. Oh, is this it? No, this was the… [inaudible 00:16:39]. That’s the appraisal, 33420, let’s go into my inventory. Yep, inactive. And find that car. So I think I just reappraised the car, that’s what happened, but I’ll give you the numbers on it. So this was a street purchase of ours, we bought it through our vehicle buying center. We paid $37,500.00 and we sold it for $41,500.00. And so where you’re in California, you bid it a little bit higher because the car does bring more money there and you’re able to ask a little bit more, but it was really cool to see the way that you were thinking through it.

Tony Hart:

Yeah, we’re headed into the snow season.

Danny Zaslavsky:

Yep.

Tony Hart:

And a two wheel drive will sit this time of year, four wheel drive, even though it’s burgundy, [inaudible 00:17:35].

Danny Zaslavsky:

Yep. Okay, cool. All right, let’s do another one. So let’s go into… Let’s see here. 33191A. Okay, so this is an older car. So this is a 2006 Ford Mustang. I’m going to show it to you on my website so you can kind of see it a little bit. This isn’t just any regular Mustang. So this is a Saleen supercharged car and so it is older and it’s only got 35,000 miles on it. So I bet from a comp perspective, this thing might be a little difficult.

Tony Hart:

And it’s got a ton of eyeball.

Danny Zaslavsky:

And it’s got ton of eyeball. So these are cars that either you pay the world for or you take it on trade every once in a while and you go, got you, got really lucky. Unless you have a vehicle buying center, and then you can source these vehicles.

Tony Hart:

Yep.

Danny Zaslavsky:

Directly from the consumer. So while I start the appraisal, who would like to do this one? Who’s brave enough?

Brian Holt:

I’ll take this one.

Danny Zaslavsky:

Brian? You’re going do it? Okay. So let me grab the VIN number and we’ll go on the VinCue. And oh, here check it out, that’s why it didn’t open. Let’s go back just for a second.

Tony Hart:

Okay.

Danny Zaslavsky:

Here’s that car, so you can see my brain was good. So here’s the inventory, $37,600.00 is what I paid for it and $41,500.00 is where we sold it, $3,700.00 profit. If we go over to… And that’s the front, if we go over you can see it was a street purchase, we acquired it, and so here was that appraisal on that Tahoe. And that’s again, a difference in market. Something we didn’t talk about when we were in here and I often pull up the original window sticker because I want to be able to get some attributes from it. And then the other thing we didn’t talk about is I often like to go into history and I like to see where did the vehicle come from before it was with us. And you can see that here in the history of the car. So let’s go ahead and do this Mustang appraisal.

Tony Hart:

That window sticker can become extremely important on cars with critical packages like BMWs and stuff.

Danny Zaslavsky:

Yeah.

Tony Hart:

Regular cruise control and stuff can make or break a car like that, so that can be really important on those.

Danny Zaslavsky:

You’re totally right. And Ford, how many different packages does Ford have?

Tony Hart:

A lot.

Danny Zaslavsky:

Yep. Okay, Brian, you ready for this one?

Brian Holt:

I think so.

Danny Zaslavsky:

Okay.

Brian Holt:

[inaudible 00:20:09] on me now. That’s a hard one to put a number on. You either love that car or you’re not sure about it.

Danny Zaslavsky:

Okay. [crosstalk 00:20:21]. So new appraisal, create new.

Brian Holt:

The age, the mileage, the [inaudible 00:20:28].

Danny Zaslavsky:

35,000 miles. Oh my goodness, it’s not letting me go into that since I already own the car. Well, that’s not fair, Brian.

Brian Holt:

Oh, darn. We can appraise another Mustang.

Danny Zaslavsky:

Yeah. Well, let’s just look at it for a second. How about that? So now we’ve uncovered the [inaudible 00:20:47], but we can still learn from it. So here’s an ’06 GT Mustang Saleen, we bought this car for $22,800.00. We have it listed for $33,000.00, so it’s going to make some money when we sell it, but another thing is it’s not because we’re overpriced, it’s because we sourced it properly. So let’s kind of begin there, right? So Brian, what would you do to first put a number on this car?

Brian Holt:

Well, I’m going to try to find anything that’s comparable, a Saleen, a Roush, something unique, older Mustang like that, comparable miles, which those are very hard to search because those packages don’t usually pull up.

Danny Zaslavsky:

Yeah.

Brian Holt:

So you’re really looking at what’s out there in those miles, that’s probably the most expensive ones out there because those are generally going to be the cars you’re going to compare it to.

Danny Zaslavsky:

Yeah. So in a unique car like this, you can see the comps aren’t necessarily accurate because a Saleen is a custom package.

Brian Holt:

Sure.

Danny Zaslavsky:

Right?

Brian Holt:

Absolutely.

Danny Zaslavsky:

So going into similars and being able to expand your search and being able to filter your comps set down so that it actually matches what you’re comparing to is going to be your first obstacle, right?

Brian Holt:

Right.

Danny Zaslavsky:

And using that… So for instance, if we go into the trim matrix here, often I like to go and look at Shelbys and if you check it out, there’s one vehicle that we can add to our comp set on the Shelby side in a Roush. It looks like there is one vehicle we can add to our comp set and in GT premiums there’s quite a few, but you’re right it’s a totally different animal. So if we go back to our similars, let’s look at the Roush here. So you can see I picked it and we can jump in and start looking at these other vehicles and see kind of where we land and where it is in the country relative to ours. So this is a $17,900.00 car, but look at this, 73,000 miles. How many miles does our car have, Brian?

Brian Holt:

35,000.

Danny Zaslavsky:

35,000 miles. So we’re asking almost double for half the miles. Make sense? And as we do that, we can look at Shelby GT. Here’s another one and this one’s closer. So let’s take a look at it. So this one’s kind of competing with us, right? So here’s the car and they’re asking $34,900.00 and their car has… Where are the miles? 21,000 miles. So this is actually something that is more of a comparable to our car, right? But notice what we had to do, we had to jump into the trim matrix and first and foremost before we ever touched what?

Brian Holt:

Wholesale.

Danny Zaslavsky:

Wholesale price to market, cost to market. It’s about the comps and something we’re learning is some dealers are listing the inventory properly, a lot aren’t, right? So first thing we do is look at the comps before we assume. Then okay, Brian, you landed on a number on this car and keep in mind, so they’re asking $34,900.00 and we, if we go back into this appraisal, ended up buying the car for $22,800.00. So we’re safe on this vehicle for sure, right?

Brian Holt:

For sure.

Danny Zaslavsky:

But from a merchandising standpoint, when you appraise it are you thinking about your exit on the car as far as from an attributes perspective?

Brian Holt:

I mean, that’s… Like you said, it’s definitely a unique piece and the one factor we have here is time of year. So yeah, I’m thinking about I kind of want to move that thing pretty quick or it’s going to be a [inaudible 00:25:07] piece in December.

Danny Zaslavsky:

Yeah.

Brian Holt:

If we still have it, but yeah, absolutely that’s definitely a car that you want to be watchful of, but you can’t replace that car.

Danny Zaslavsky:

Yeah. So in VinCue we can also see actually that it looks like it has a couple recalls that we should take car of, so that’s exciting to be able to see that we have the data even on a car this old, so that’s pretty cool. Okay. So over to the inventory side before we leave this car. Joe, what do you guys do from a merchandising standpoint when you have a rare piece like this? What do you [crosstalk 00:25:43]?

Joe Reck:

I think immediately when you look at this screen right here is you’re going to go to the trim section and where the GT Premium is you’re definitely going to either add or replace it with Saleen. Just me being a car geek, I’m a Mustang guy, had a couple [inaudible 00:25:59], that’s immediately, I want to market this correctly so when someone searches for this year and a GT and it stands out. That’s definitely what I want to start with.

Danny Zaslavsky:

Okay. Good. Good catch. So it’s not marketed as a Saleen and not a GT. Good catch. Anything else?

Joe Reck:

Not on that screen.

Danny Zaslavsky:

Okay.

Joe Reck:

I think we’re all right there.

Danny Zaslavsky:

Where would you go next?

Joe Reck:

I’m going to build my description, so I’m going to click description and then you can see that you already have some presets already in there, some great language. So I’m going to start on the right hand side of the screen and I’m going to click options. And then I’m going to click everything that I know that this car has got as far options, and then click the engine, which is important of course.

Danny Zaslavsky:

Okay.

Joe Reck:

And then we’re going to go to features and click those key items that we know that are how we want to market this vehicle. There are certainly some things in there that we don’t. We’ve got those key items that the customers are looking for, mechanical, color, trim, those are all things we want insider descriptions so when someone goes out to the web and Googles 2000… Is it ’07 or ’08?

Nicki Hodges:

Six.

Joe Reck:

’06? 2006 Ford Mustang Saleen with white exterior, gray interior, that it’s highlighted when someone searches it. Another big thing is of course, being a car guy, we want to highlight this one is supercharged. So we want to definitely get that into the description too and added.

Danny Zaslavsky:

Yeah. I’ll tell you something that helps us, because this is a new piece of inventory and my inventory is reconditioning. So on a car like this, whoever’s buying it is going to want to know that we’ve recond the car. They’re going into the recon tab and starting to choose what work we’ve done to the car and then broadcasting it out to the description is really going to help the buyer feel good about the purchase.

Joe Reck:

Absolutely, especially tires. It looks like the car had new tires on it, that’s something that we definitely want to market.

Danny Zaslavsky:

Yep. Okay, cool. We’re going to call on to the tricky one and, Nicki, I’m going to ask you some questions on this one, if that’s cool.

Nicki Hodges:

[crosstalk 00:28:07].

Danny Zaslavsky:

33… Actually, let me grab it off the site first. Let me see if I can do this right this time. So I think I know what I did wrong last time. 794. So… So this is a 2016 Mercedes GLE AMG, so it’s a pretty expensive car new and let’s grab that VIN number. And [inaudible 00:28:36] last time, which is why [inaudible 00:28:38] appraisal. So let’s go new appraisal, create new, and we’ll use this. Okay, so first and foremost, Nicki, let’s talk about… We were having some discussion earlier around the filters.

Nicki Hodges:

Yeah. Mm-hmm (affirmative).

Danny Zaslavsky:

Let’s talk about how that works.

Nicki Hodges:

Okay, so because we VINs and we never stop following them, we [inaudible 00:29:06] how a vehicle’s advertised previously when it was being [inaudible 00:29:09]. So what we’ve pulled down on the attributes side is the value that you see is that we know that value has increased in this specific market, in that zip code, by that dollar amount at the time that this vehicle sold in that market. So if I know that my vehicle has an entertainment package, it’s going to increase according to [inaudible 00:29:28] data by $320.00 and if I only want to be comped against that then I can lock that package in or that attribute in. It’s [inaudible 00:29:36], but those numbers, those values depending upon what we have searched versus [chrome 00:29:40] data or chrome build data, which is also provided in [inaudible 00:29:44] and it’s going to be the actual cost of that feature or attribute. But these numbers we know from what we’ve seen sold is increasing the value of that to be [inaudible 00:29:53] in that market.

Danny Zaslavsky:

Cool. So you said something really important. How it was advertised previously.

Nicki Hodges:

Right.

Danny Zaslavsky:

Okay, so I think, at least for me, you just kind of gave me an a-ha moment, most dealers think when they appraise the car that’s the first time it’s ever been appraised. Right?

Nicki Hodges:

Right.

Danny Zaslavsky:

But in VinCue we can see every time it’s ever been appraised previously.

Nicki Hodges:

That’s right.

Danny Zaslavsky:

And we’re tracking the attributes to how it was marketed.

Nicki Hodges:

Exactly.

Danny Zaslavsky:

Right? And then giving that vehicle credit to its future appraisal.

Nicki Hodges:

Exactly.

Danny Zaslavsky:

All right. That’s a really big deal. Tony, when you… On a piece like this that’s kind of unique, what do you go through to appraise this car?

Tony Hart:

Well, one of the things I would for sure is the window sticker on a car like this because I once had a Mercedes with no navigation and I couldn’t talk anybody into Apple CarPlay, they wanted nav. So we know that there’s certain things that are make or breaks, so I would go in and look at the window sticker.

Danny Zaslavsky:

Okay.

Tony Hart:

And then I would line up that data.

Danny Zaslavsky:

Very cool. So we bought this actually from an individual on the street and this history is actually what really helped us with it. We can see that they bought it with 48,000, so not very many less miles than it has on it today, a year ago, from CarMax in Newport, Virginia and before that it was in Florida. And you can see what it was listed for and it looks like it floated around a couple CarMax’s before it was able to sell. It went from CarMax Fort Lauderdale to Pompano Beach and then to a CarMax in Virginia. So we can see that even… Dan, you were talking about this earlier.

Dan Riggs:

Very different markets, [inaudible 00:31:39].

Danny Zaslavsky:

What market’s going to provide the best opportunity. Cool. Very cool. Okay. So the last thing we’re going to talk about and we’ll kind of start wrapping up is making a targets list because these appraisals are only valuable when you can know what you guys are wanting to buy. So Dan, can I start with you?

Dan Riggs:

Sure.

Danny Zaslavsky:

When you’re going after buying inventory, how would you make a targets list to know what to buy?

Dan Riggs:

Well, we start based on exactly where we were, four wheel drive as opposed to two wheel drive. We’re in a market right now where if you’re buying a Mustang, like you were saying Brian, it’s going to sit for a little while. So I would make sure that’s something that sold well at my store or one of my other stores and that I had a lot of people in the past that were maybe interesting in that sort of thing. So I’d factor that into some of my buying decisions as well, if I was going to keep it or not or send it on.

Danny Zaslavsky:

Were you keeping a list anywhere of cars for when you went to an auction? Was that cataloged into your intuition, or was that cataloged into an Excel sheet, or what were you doing?

Dan Riggs:

It was a little both. Being in the business for 14 years, there was a lot of it that was just off the cuff, I knew that I was going to want to keep something, but then I also, if I was off that day and I had maybe a rookie coming in and doing some appraisals, I need to make sure that they understood that as well. So we were all kind of on the same page of what we wanted to buy from month to month.

Danny Zaslavsky:

Okay. So I hear a lot of intuition.

Dan Riggs:

Mm-hmm (affirmative).

Danny Zaslavsky:

Brian, what about you?

Brian Holt:

Yeah, it’s a lot of intuition, as well as me just knowing the dealership, what you perform with, what was in your sales data, that’s the biggest thing for us.

Danny Zaslavsky:

Got it. And then would you make lists ahead of time before showing up at the auction? Or would you show up at the auction and make your list on the fly?

Brian Holt:

No, I’d make it ahead of time, the day before, evening before.

Danny Zaslavsky:

Evening before? And were you appraising every one of those cars and putting ACVs on every one of those cars?

Brian Holt:

I would get through as many as I could.

Danny Zaslavsky:

Got it. And what do you think your success rate was, percentage wise, to your list versus actual acquisition?

Brian Holt:

10%.

Danny Zaslavsky:

Interesting. So you would only buy… So 90% of those cars would end up on somebody else’s lot and 10% of those you actually bought.

Brian Holt:

Yes.

Danny Zaslavsky:

And then how many more cars did you buy that you never expected to buy when you were there?

Brian Holt:

Very few.

Danny Zaslavsky:

So you bought the 10% and then didn’t buy any more cars or did you see some roll through and then raise your hand.

Brian Holt:

I mean, sometimes you would. It just depends on the sale. If you’re covering five lanes by yourself, and you’ve got your list, you don’t have a lot of time to cherry pick. But once in a while you’d see something that came in after another car and that might be the one.

Danny Zaslavsky:

Yep.

Brian Holt:

[inaudible 00:34:30] on your phone and take a shot at it.

Danny Zaslavsky:

Cool. All right. I’m asking all these questions because there’s obviously a better way. That’s kind of the whole point of this. So Joe, how were you making targets lists of acquisitions?

Joe Reck:

Same way, it seemed like depending on if it was a store or for the independent side of it, it’s either a small list, I’m working it the night before, we’re trying to appraise them. I’m going at the auction, jumping from lane to lane, and if I know that there’s a break and I miss one car, I’m going to jump and kind of look at some other stuff that’s going through and I have bought stuff on the fly. But we know VinCue’s got definitely a better way to do it.

Danny Zaslavsky:

For sure, yeah.

Robbie Anderson:

Intuition, just knowing my market, listening to my customers, trying to figure out kind of what their needs, wants were and that’s kind of how I base my list on.

Danny Zaslavsky:

And so when you got burned on a car, would that be like a bad night on tequila and you never drink tequila again?

Robbie Anderson:

I cannot answer that question.

Danny Zaslavsky:

Okay. All right. Tony?

Tony Hart:

It’s interesting, intuition, as you talk about this you want it to be real scientific, but most used car managers, used car guys are going look at everything from… In California right now, gas prices are surging and on Sunday three of my four cars were hybrids. So a lot of intuition plays on that, set lists probably could get you into more trouble than help, but I’m always previewing, appraising, and looking ahead of time, and doing like Brian said, it’s about a 10% success rate on a good day and on a bad day it can be less.

Danny Zaslavsky:

Cool. All right. So let’s go ahead and share this last piece of this conversation in order to kind of understand what is the better way. So the thing that we’re learning, and again the big box stores, the Carvanas of the world, [00:36:28], are all giving us an opportunity to level up because they’re thinking in the vehicle buying center mentality where they have smart people who are looking at either, Dan like you said, selling cars between their own stores, their own markets. Groups have been doing this for a while and they use data to kind of understand where that car would do best, right? And that also means that they’re looking for soft markets, which dealers have been doing forever. Like we used to buy out of Fort Lauderdale because we knew we could buy expensive looking cars for less because there was more of them there.

Danny Zaslavsky:

So the first thing we like to do, you’ve got tools here to be able to jump into… Let’s go into inventory. [inaudible 00:37:22] There we go. Okay. So let’s look at… Okay, let’s go to your own sales. So one of the things you can do when making a targets list is look at your own sales first. You can do it by any category, but this is a really good way to be able to sort how many cars you’re selling in a given brand, model, sub model, year within any period of time. And so what I like to do is make a targets list on three categories. One is, your own vehicle sales and you can’t really argue with it because it’s what you’re selling, right? And this what a lot of times our intuition is based on because we remember a high grossing vehicle or we remember a low grossing vehicle. And you can open and expand that inventory and see it. You can see when it was listed, and you can see when it sold, you can see what the gross was, you can see how fast it sold.

Danny Zaslavsky:

This data carries up into the appraisal in that top right hand corner into what we call a buying plan. We’ll look at that here in a second. The next thing, and Tony, you and I were talking about this earlier is demand. Right? Chris, can you share a little bit, what is… Give a little color to what is demand data.

Chris:

Okay. So for the four star system in VinCue the demand data is basically a combination of the highest, fastest turning vehicles and the highest volume vehicles just divided into large buckets. So to get four stars in our system, you have to be really good volume vehicle and turn really fast. This demand data is basically based off of vehicles and how fast that they meet the internet and then what volume they’re moving-

Danny Zaslavsky:

Within my market.

Chris:

… within your market.

Danny Zaslavsky:

Got it. So we’re in midsize, right? Let’s first see… This is last 30, this is the last 60, let’s just sort by highest selling. Looks like Fusions are doing pretty well, and interestingly enough, Fusions if you would have asked my intuition on them, I would think that they’re high [inaudible 00:39:39] cars, right? But data shows that they’re actually leaving pretty quick. So let’s sort by sold again, and it looks like ’16s are doing the best and if you look, they’re going up in demand and there’s 41 of them for sale in the market right now. 27 of them have already sold and if we want to go touch them, here is ones for sale that we can go to.

Danny Zaslavsky:

Now, this is interesting because what are we used to seeing here? This is Odessa, [OVE 00:40:09], Manheim, I-70, right? These are all auction cars we can start applying filters, but where is the more profitable place to search? With private, right? Private party listings. So we can see what I have here and here in a minute we’ll jump over to private sale because this targets list now, if I want to increase my gross my 2k [inaudible 00:40:34], not because I’m necessarily buying it any better, but I’m eliminating all these additional fees. Right? Opportunity fees, so expert tax, and transportation, and so forth.

Danny Zaslavsky:

So we looked at your own sales and then we looked at demand. Let’s look at one more. Tony, who is somebody you compete with in your market?

Tony Hart:

M&S.

Danny Zaslavsky:

M&S?

Tony Hart:

Yeah.

Danny Zaslavsky:

And?

Tony Hart:

[inaudible 00:41:05].

Danny Zaslavsky:

Actually, I think earlier we had their site up. So let me just grab their website.

Tony Hart:

They sell a lot. They sell more cars than I do, but they’re a big competitor. We are always competitive on the same cars. When we’re in the auction, we tend to be bidding on the same cars.

Danny Zaslavsky:

Interesting. Okay. So here’s theirs and so the third thing we look at is a competitor report. So a competitor report allows us to see how somebody is treating their inventory strategy or lack thereof. So we can see their cards by price bucket and by brand share. Okay? So this is inventory, so this is live inventory. So if we go over to their used vehicle list, here’s their cars and we can search it by their age. And it looks like they’ve got a lot of old age inventory, so they’re sitting on quite a bit of it, but we can also see our quality score. Remember Chris was talking about that earlier, relative to their inventory. And so all of a sudden we can start seeing hey, this ’17 Four Runner is something that would sell pretty fast at our store. Okay? And you can start making this targets list.

Danny Zaslavsky:

The other thing and probably where I spend most of my time is going over to the sales tab, clicking summary, because when you start looking at what they’re selling it looks like they’re selling a lot of Toyotas. They sold 33 in the last 30 days and if we want to see what Toyotas they sold, we can go to their used car list, sort by brand, and roll down to Toyotas, and we can see what they’re selling. So it looks like they’re selling a lot of Tacomas. I see Tacoma, Tacoma, Tacoma, Tacoma, Tacoma, so if that means, Tony, there’s a need for Tacomas in your market, right?

Tony Hart:

Interesting enough, in my store, the Hondas that they sell don’t work.

Danny Zaslavsky:

Interesting, okay.

Tony Hart:

Yeah, it’s because we have a lot of franchised dealers, a lot of franchised dealers.

Danny Zaslavsky:

Okay.

Tony Hart:

And just in their general area within a 10 to 12 mile radius, they’re not as aggressive and not as marketed on the certified sites, so they capture a lot of that market. Where I’m at, 20 miles away, it’s a different story.

Danny Zaslavsky:

Interesting.

Tony Hart:

And I buy Hondas and they sit.

Danny Zaslavsky:

Interesting.

Tony Hart:

So that’s the intuition side. You’ve got to always use your intuition [crosstalk 00:43:33].

Danny Zaslavsky:

Yeah, and that’s a really good point. I love that you called me on that because that’s taking your own sales, remember we started with that? And then market demand data, and then competitor data, and using those three together in order to make a targets list. And then going out and shopping, and so the last place we’re going to land is we’ll go over to the [MPC 00:43:59]. And then into outbound. And here we are. And so now, for instance, I know… Actually, I just searched for this earlier, I need Odysseys and I can start reaching out and bringing these Odysseys into my car dealership and sourcing them directly and even trading on some of these because they may be [inaudible 00:44:36].

Danny Zaslavsky:

Okay, guys. Any closing thoughts on appraisals? Anything that came to your head while we were kind of going through this on kind of the way the appraisal market is shifting?

Tony Hart:

Prices are going up, we know that. I think that the more information and data you have is even more relevant in today’s market. And the one thing maybe we didn’t talk about is watching the trailing prices because your product shows that, right?

Danny Zaslavsky:

Yep.

Tony Hart:

If it’s been going up, if people are discounting them, and sometimes you go know right away when guys are starting to mark up cars because they’re getting really, really hot, just like trucks did nine months ago, so that would be a last piece of information that I would share is watch the pricing. And use your intuition if stuff is getting hot, buy that stuff and make some money off of it.

Danny Zaslavsky:

Have you raised prices over the last year?

Tony Hart:

Absolutely. I went… Just because prices at auction a month ago approximate were so high, they had gone up so dramatically, I know that those guys buying them in my market have to re-market those cars, and they’re going to re-market them [inaudible 00:45:43]. I went and I raised every car in my inventory $1,000.00 to $1,500.00 depending on what it was.

Danny Zaslavsky:

Wow.

Brian Holt:

[inaudible 00:45:54] only in the last year.

Tony Hart:

Yeah. I knew a couple guys that said, oh we didn’t really mark anything up, trucks and stuff, and I’m like boy, did you miss the market because the wholesale prices climbed up [inaudible 00:46:07]. And that dashboard will give you that because you’re watching the market.

Danny Zaslavsky:

Yeah, because we can see the history on that car.

Tony Hart:

Yeah.

Danny Zaslavsky:

What price… And it’s interesting, Rav-4s, ’18 and ’19 Rav-4s are selling used for more than they sold new.

Tony Hart:

Mm-hmm (affirmative).

Brian Holt:

It’s about almost anything right now.

Danny Zaslavsky:

And they’re not unique, right?

Brian Holt:

No.

Danny Zaslavsky:

Exactly. Cool. Well, thank you guys very much for coming together. For those of you that are VinCue clients, if you got anything out of this and want to reach out to your performance manager, you can just email support@dealercue.com. If you need to ask me any questions or call me on anything I said today, I encourage you to do it, reach out danny@dealercue.com and thanks for being part of the discussion. [inaudible 00:46:54].

 

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