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The hidden variables driving used car pricing and how to exploit them
Featuring Derek Hansen, VP Operations at Cox Automotive
Welcome to another edition of the Car Dealership Guy Podcast Recap newsletter.
Used car sourcing continues to get tougher, but it doesn’t have to be.
In this episode, Derek Hansen, VP of Inventory Management Solutions at Cox Automotive and head of vAuto, broke down the data behind today’s inventory challenges and how top dealers are adapting their sourcing, pricing, and appraisal strategies to stay competitive.
1. AI’s value depends on who’s using it
AI is moving fast, but the real gains are coming from how it’s deployed.
“It’s moving quick. And what’s fascinating… is how it can be deployed to accelerate tasks and functions. And that goes for automotive and other industries.”
According to Derek, it’s not Gen Z or technical experts leading the way. It’s industry veterans who understand the nuances of retail and know how to apply AI to real-world problems.
2. Tariff volatility is pulling demand forward
April was one of the strongest months in recent history across Cox’s digital platforms.
“April was one of the biggest months they had seen in the last four years from an Autotrader and Dealer.com perspective.”
New car day supply dropped from 70 to 60, and used dipped below 40. Some OEMs began discounting, others paused shipments. The wholesale market moved early, with MMR rising for nine straight weeks (well above seasonal norms).
3. Market visibility is now a competitive advantage
Dealers are navigating wildly different supply situations depending on where and how their vehicles are built.
“You could have two dealers even in the same town with that model… Are they going to have different perspectives on how to price that even though the town’s the same? Absolutely.”
A 2023 Toyota Tacoma might behave differently on a Toyota lot versus a competing store. Local customer base, service retention, and new car trade-ins all affect pricing power—and that’s not something generic benchmarks can capture.
4. Innovation is shifting toward problem-solving
When asked if innovation had slowed since Dale Pollak stepped back, Derek pointed to the continued focus on solving three urgent dealer problems:
“First, it's how do we continue to drive the best insights and actions for dealers around inventory from the data that we have? Two, how do we help them compete in a quickly evolving e-commerce world? And three, where are the other connection points that we can continue to improve their operations?”
It’s not about new bells and whistles. It’s about helping dealers make decisions faster, compete for trades, and execute on sourcing and pricing in a more compressed market.
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5. The appraisal process is becoming more transparent
Today’s customers often arrive with 2–3 competing offers in hand. Derek says dealers need to move past the paper-slide offer and turn appraisals into conversations.
“We’re walking the car, making sure you're highlighting the items… not just putting a blanket estimate of recon.”
That includes explaining local supply conditions, recon needs, and trade-in tax credit benefits—key details that can close the deal even when your offer isn’t the highest.
6. Appraisal improvements are rolling out gradually
Cox is updating how dealers assess vehicle condition, aiming for more consistent visibility across imaging, diagnostics, and OEM build data.
“vAuto is bringing in better imaging… OEM data, the consumer offer mechanism, OBD2 and other sources on condition that you can pull through.”
The goal is to make the appraisal process easier to explain, more standardized, and more actionable without slowing down the desk.
7. Dealers are using data to narrow the sourcing funnel
Instead of casting a wide net, some operators are getting highly focused.
“We have a tool… that pulls in all the channels… so that you can filter and search the ones that are best suited for your business.”
One Florida dealer filtered missed trades, service lane leads, and auction listings to identify 10 high-opportunity vehicles. The list went straight to the BDC, and they worked them like leads. That kind of targeting is where the edge is.
8. Internal sourcing is still underutilized
Many dealers still default to auctions and ignore higher-margin sources that are already in front of them.
“Historically, it was easy to source cars at the auction… But those are exclusive opportunities. Those are relationships I have with my clients that I should be able to position myself better for.”
Whether it’s finalizing missed appraisals or identifying cars in service, the challenge isn’t data—it’s putting the right structure and incentives in place to act on it.
9. Pricing is becoming a probability game
Dealers are increasingly using models that calculate the likelihood of sale at different price points.
“Profit Time GPS runs a probability model on your inventory… helping you understand the probability of sale on that VIN in the next seven days at a given price point.”
It’s not about automation. The system surfaces opportunities—but managers still choose how to act based on inventory goals and market conditions.
10. People and pay plans still drive outcomes
No tool matters if the team isn’t trained, comped, and focused on the right things.
“Those dealers that… are focused on putting the right incentives in place and staying with the team… Those are the dealers that yield the biggest wins.”
Whether it’s tying pay to trade-in capture or training sales teams to prioritize acquisition, Derek says the human side still makes or breaks the process.
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