Cox Automotive Executive and vAuto Founder Dale Pollak Reveals New Truth of Used Vehicle Profitability in Latest Book

OAKBROOK TERRACE, Ill., Feb. 5, 2020 /PRNewswire/ -- In the spring of 2016, the used car business took a dramatic turn that few dealers seemed to notice.

At that time, several market forces—ever-greater vehicle price awareness and transparency, rising consumer demand for near-new used vehicles and increasing off-lease volumes, among others—converged and caused a steep drop in the net profitability of used vehicle departments across the country.

"It was stunning to me when the National Automobile Dealers Association (NADA) reported the average retail net profit per used vehicle retailed in 2017 was -$2," said Dale Pollak, vAuto founder and Cox Automotive Executive Vice President. "It didn't seem right that dealers would be retailing record numbers of used vehicles and losing money."

Pollak and a team of data scientists spent nearly two years researching the market dynamics and the net profit problem. This work is the focal point of Pollak's latest book, "Gross Deception: A Tale of Shrinking Margins, Shifting Markets and the New Truth of Used Car Profitability."

"We had a lot of dealer inventory and used vehicle transaction data to dissect," Pollak said. "But two things eventually became readily apparent—market conditions were causing margins on dealers' used vehicle inventories to erode much faster than ever before, and a sizable share of virtually every dealer's inventory, for a variety of reasons, represented distressed investments that would result in retail losses."

Gross Deception details the discoveries Pollak and team made on their journey to understand the market and dealership decision-making factors that continue to contribute to ongoing declines in used vehicle net profitability. The book reveals what Pollak regards as "new truths" of used vehicle profitability—such as the fact that some cars, despite being "fresh," won't produce the return on investment many dealers believe they should.

"It's a fallacy to think that just because a vehicle is 'fresh' it deserves an opportunity to deliver a front-end gross," Pollak said. "That's certainly true for some cars but, in today's market, it's surprising how many vehicles start out in trouble from an investment perspective."

Gross Deception also reveals Pollak's efforts to develop an algorithm-driven system that can accurately reflect each used vehicle's net profit potential and help dealers reduce the number of investment-distressed used vehicles in their inventories.

"One of the key take-aways that I hope Gross Deception leaves with dealers is that managing each vehicle to optimize its distinct net profit and investment return potential has become the only way to maximize the money you make as a used vehicle retailer," Pollak said.

Gross Deception will be officially released at the NADA convention in Las Vegas on Feb. 14-17, 2020. The book is also available for purchase on Amazon starting on February 5.

About vAuto
vAuto® provides innovative technology, tools and business intelligence to thousands of dealerships across the United States and Canada, helping them compete more effectively and increase new/used vehicle sales volumes and profits. Founded in 2005, vAuto revolutionized dealers' used vehicle operations with the groundbreaking Provision® suite of tools. Leveraging The Velocity Method of Management®, pioneered by vAuto founder, Dale Pollak, Provision helped dealers adopt a more transparent- and turn-focused approach to used vehicle acquisition, appraising, pricing and merchandising based on real-time, local market supply-and-demand data. vAuto's solutions also include Conquest, a new vehicle inventory management and pricing system, and Stockwave, which enables dealers to efficiently find and purchase vehicles from leading wholesale sources via a single platform. In 2018, vAuto released the Provision ProfitTime metric and methodology to help dealers maximize inventory turn and gross profit based on the investment value or profit potential of each vehicle. The same year, the company expanded its integrations with Cox Automotive's HomeNet unit and acquired iRecon, an online reconditioning workflow platform. The moves extend vAuto's efficiency-focused used vehicle management solutions into vehicle merchandising and reconditioning.

Headquartered near Chicago, Illinois, vAuto is a Cox Automotive™ brand.

About Cox Automotive
Cox Automotive Inc. makes buying, selling, owning and using cars easier for everyone. The global company's 34,000-plus team members and family of brands, including Autotrader^®, Clutch Technologies, Dealer.com^®, Dealertrack^®, Kelley Blue Book^®, Manheim^®, NextGear Capital^®, VinSolutions^®, vAuto^® and Xtime^®, are passionate about helping millions of car shoppers, 40,000 auto dealer clients across five continents and many others throughout the automotive industry thrive for generations to come. Cox Automotive is a subsidiary of Cox Enterprises Inc., a privately-owned, Atlanta-based company with revenues exceeding $20 billion. www.coxautoinc.com

SOURCE vAuto