For over a hundred years car dealers usually use the time of year to help determine their pricing on vehicles in used car lots. The more time a car has been sitting and not sold off, the less the car is supposed to be worth. Marking down prices is usually the strategy to get rid of these cars so they don't sit forever.
But Dale Pollak, founder of inventory-management software provider vAuto, is urging dealers to ditch the calendar in that regard. It may serve as a time aid for keeping appointments and remembering birthdays. But he says the calendar – or measured time – is a faulty way to manage used-car inventory.
“For the past 100 years, we’ve assumed the amount of time you hold a car relates to the profit it holds,” he tells Wards. “That’s a false assumption. “Yet it is the foundation for every decision of consequence regarding a used car.”
His company has developed what Pollak describes as a revolutionary data-crunching product that is a more accurate way to manage vehicle inventory and address today’s compressed margins.
Called ProfitTime, the software determines vehicle worth and profitability not by days spent on the lot but by other factors.
It ranks vehicles as Platinum, Gold, Silver or Bronze, which vAuto says better reflects true worth and aids in appraising, pricing and merchandising.
“It feels like we discovered a hole in the universe,” says Pollak who also serves as executive vice president of Cox Automotive, vAuto’s parent company.
He adds: “Our journey to ProfitTime began as we asked ourselves a critical question. ‘What can we do differently to help dealers minimize, if not stop, the advance of margin compression in used vehicles?’
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