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Pollak looks at what's ahead for dealers

June 1, 2018
In a Dickensian way, Dale Pollak suggested that dealers are experiencing the best of times during nearly a decade of unprecedented sales numbers of new and used vehicles. But, he cautioned, dealers must continue to evolve to succeed.
Pollak, the founder of vAuto, gave a special presentation at the CATA on May 17, "A View of Margin Compression & Mobile Convergence."
vAuto is a software company centered on a specific inventory-management product for car dealers, and Pollak has been regarded as a guru of auto retailing. The inventory-management system is designed to help dealerships select, price and sell vehicle stock based on marketplace supply-and-demand analytics. 
A former dealer, Pollak has written books on his belief that running a successful used-car operation in the price-transparent internet age requires focusing more on volume than fat per-vehicle gross profits. When it comes to inventory, it’s turn, baby, turn.
Pollak’s so-called "velocity" philosophy is this: Hitting lots of doubles and singles rather than an occasional homer puts more runs on the board. It also prevents stranding a lot of vehicles on the lot because they are priced incorrectly or, because of local demand, shouldn’t have been there in the first place. He called 20 percent to 30 percent of used-car inventories over-aged, "dead" stock.
He said: "A used car has always been like a cube of ice. It always dissipates."
Pollak said that dealers’ investment in used vehicles has increased, yet the retail yield is down. "I don’t think there is any reason to believe that trend will stop," he said. "Because of the internet, margins are compressed. Selling cars alone does not make money; dealers must become efficient."
Efficiency also is needed in the methods dealershipsuse to promote themselves. Pollak said that 90 percent of consumers spend time online but that 66 percent of dealers’ advertising budgets are spent on traditional media outlets. 
Reducing employee turnover can make great strides toward efficiency, said Pollak, who noted that four in 10 dealership employees tend to leave in a year. Among salespeople, the rate is 67 percent.
Looking ahead, Cox Automotive, the parent company of vAuto, projects that while 17.1 million new vehicles will be sold this year — 14.2 million retail, 2.9 million fleet — by 2034, the numbers will be 15.3 million — 6.6 million to fleets and just 8.7 million retail.