How we do things in the car business is fundamentally flawed

October 13, 2024

We rely on past data to make present decisions.


Let that sink in…


In the largest traded asset market that exists…used cars…we treat yesterday’s auction results as today’s reality.


We look at things like auction sale results, and use data from deals that are already in the past.


But here’s the problem…


Every other major industry…finance, real estate, commodities…builds their models to predict the future.


What happened in the past is no more than something to review


Yet in the car business, even if an auction trade happened 10 minutes ago, we treat it like it’s gospel for where the market is.


Here’s where it gets dangerous…


Companies can manipulate data.


Condition reports, sale results, and algorithms…even the valuation tools most of you use…


They control it all.


A few tweaks in condition reports or grading and they can influence the market by 5% or more.


What happens with No-Sales that were bid way above but the seller is buried? Arbed units? Does that affect market reports? Are conversion rates published?


If Wall Street operated like this, people would be up in arms.


But in the car business, we just accept it.


“Oh well”. That’s how we’ve always done it


We look to the past instead of building predictive models based on emerging tech, global events, or even gas prices.


Why are we okay with this?


Imagine a world where we start predicting instead of reacting.


Imagine valuing cars based on future market trends, not what happened at auction last week.


Imagine having the tools to truly stay ahead of the curve.


The question is: when will we in the car business wake up and stop accepting that the past determines our future?


Let me know your thoughts below


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📌 P.S
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Be sure to follow Auto Auction Review where I will be publishing “Auctions in the News” that will be curated industry information mixed in with editorial opinion like you see above

Dane Hulse

President/Founder |  AAR

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