When Covid First Hit
You know, last year on this day is when it officially became a disaster of the world, right? In other words:
What materialized during the past 12 months and then came out the other side to be the brightest days in the history of the wholesale business, right?
What’s Happening Now
So what we got going on now is, I would say, version two. It’s version two, where we’re watching coast to coast, wherever we’re pricing, buying and selling cars. We’re watching cars, a higher percentage of cars that are bringing way more money…
Since our data shows us in Accu-trade where the car has been, the pecker tracks of that vehicle, since it was born. We’re seeing way more cars that are selling wholesale for more than they were asking retail last year. Last year, you know, retail price, $53 G ca brings $57,000 on the auction block today.
What this is doing to the buy/sell guides –
If you were going to do some sort of an intellectual study of things and you’d come up that there must be something wrong with the data, cause this is not possible. Somebody doesn’t know what they’re doing. That’s a pontificators point of view. Cause a pontificator are not traders, they’re not buyers and sellers. They’re not active. They’re not on the field. They’re in the stands. And they learn throughout their classes of graduate level statistics, so forth. There’s certain norms and there’s anomalies and there’s all kinds of other things. And when, when something doesn’t make any sense, they throw the outliers out. We see that actually on MMR. In other words, the stars (*) next to the results are outliers. Outliers mean they brought something that the computer in the AI and the pontificator can’t understand.
So in order to come to a number that makes sense, they’ve got to throw them out because you can’t explain it. Therefore it becomes outside the data set that the people pontificators use to tell everybody what’s good and what’s bad and why it went up one quarter of a 10th of a percent.. Which translates into what I would call noise. I guess initially you would say that they do that for the people that buy and sell cars would have some guidance in terms of desirability and where the market direction is going. But it turns out to be only good for other pontificators and has nothing to do with a trader. A person who’s their job and their livelihoods based on understanding how they’re going to find cars, how they’re getting rid of cars, why they get rid of cars and where they do it. All the rest of the things that have started since the beginning of time.
Now what Accu-trade does as we look at this…, and, you know, obviously we are involved with buying/selling thousands of cars and we’re up a couple hundred thousand appraisals a day here. We’re actually in the middle of something that if you’re going to talk to a trader or a person like a used car manager, a used car dealer, or somebody whose livelihood is directly related… Or a dealer principal, whose investment is their portfolio of cars, right? They also have 401ks and stock accounts with professionals to tell them how to buy and sell stock. It’s the exact scenario.
In other words I think what we extract and what we observe, and then hopefully what we’d be able to help people understand are the anomalies that don’t make any sense, but they have to make sense because otherwise you become an in lane pontificator, even if you’re not in lane.
The Self-Defense Mechanism of In-lane Pontificators
So what I mean by that is this Sean-ie. You’ve been in the auction business a long time. So I think you’ll understand this pretty clearly. When a car gets up in the wind and a couple people lock up, three, four people are now locking up on it on the internet and it’s banging away and a floor could be, you know, 27 G and a car brings 33 G. You can see where CarMax quit, you can see where Carvana quit. You can see who really is the best end user. And then everybody starts saying, “I don’t like grapes”, because you can’t reach them. You say you “don’t like grapes”.
No, the answer would be, “Oh man, he stepped on his balls on that car. Boy, what’s he going to do with that? He, he, he killed himself.” Okay. The pontificator, the in-lane pontificator at that point is basically justifying why they don’t have the ability to understand why the car brought so much money.
And that’s like a self defense mechanism, right? “Oh my God, what’s he going to do with that car?”
First of all, what’s the difference.
Now there’s a willing buyer or a group of willing buyers ran a car to a point where they all got sick of bidding and they don’t see how they could actually find a better end user than the person that actually was still standing.
The Buying Algorithms at Work
Now, you’re starting to see this. I’m watching it very clearly, right? Where I could tell you exactly where certain algorithms from the bigger buyers are set to buy. They’re bidding on just about every car. So therefore the pontificator in the lane, once again, say “oh Jeeze they’re buying all the cars’ ‘ They’re not, I think we covered that in a previous session. No, they’re not. What they’re doing is putting it on cruise control and ending their bid at a point where they’re happy to own it.
And therefore, if they own it, when I look at the statistics, it’s rare that the car brought anywhere close to too much money. They bought a car for what it was worth.
It could be a little muddy because of equipment or dust or that, or whatever, but they bought a car worth of candy and they need fillers. So they’re happy to do that, right?
“Fillers” are cars that actually are in the middle of the bell curve that fill the holes up.
That’s not a point car, and that’s not a trick car. Something with, you know, too many miles with a little story to it. But it’s so cheap. Anybody in the world can sell it to a, let’s call it a different demographic of buyer. You follow me?
If you ain’t got them, you can’t sell them.
When you think about it, Seanie and anybody else, that’s been in our business for a period of time, the pontificator who loves to throw stones at the person that turned out to be the best end-user. You know what they do?
They go home with a car.
And you know something, it’s really weird how this works. If you ain’t got them, you can’t sell them.
You can’t talk about how much cars are bringing to a customer when they walk in the door and they’re looking to buy one. If you ain’t got them, you definitely can’t sell them. You got to have them.
Transact with Confidence but it all comes down to this…
Now, what that really means is it’s all about, you know, when we talk about our tools to commoditize the VIN, and we give you all the statistics and reality and insurance policies around that. So you can transact with confidence.
What it really means is the market really will dictate what the value of a VIN is. And, and by the way when you look back and forth to swing of the rhythm of the market in different categories of cars.
It gets to a point like we are right now on the anniversary of disaster, we are on the anniversary of the second birth of the craziest, most unexplainable, incredibly dumb thing in the world, which is all based, obviously on what?… you guessed it supply and demand. You follow me.
Nobody’s Coming in to Buy your Cement Parking Blockers
In other words, when they’re aint’ none, and you got to have them, cause it’s really hard as piss to sell cement parking blockers, you can’t sell them, but you can’t drive them. So nobody’s coming in to buy your cement parking blocker. You see, you gotta have something instead of the cement parking blockers therefore it’s called a car, right? And if you ain’t gotta ‘em, you ain’t gonna sell them.
Any vehicle that falls into any category, that’s one that you like, and there’s a bunch of other people the same, and there aren’t enough of them… like a big shock.
They go and bring more money. You see what I’m saying to you?
The Books Don’t Catch Up
And, and so then the, you know, the pontificators also say, “well, you know, the books don’t catch up” . “ NADA won’t let me finance it.”
That’s, that’s an inevitable thing. It’s kinda like when market reports don’t catch up and you’ve got a two, three, four week period where they can’t catch up with the real market. So cars are bringing it to three g, four g over five, eight, ten G over, right. It’s not unusual to see one bringing 10 G over whatever they brought 30, 60, and 90 days ago.
And the thinner traded units. When you look at one, put it in Acc-trade, look to see where it was last year or the year before, two years ago. It’s not unusual to see a 2017 that retailed for $49,000 in 2017, bring in $52 500 today, and a retail for less than three years ago.
It’s not unusual at all. Now, is it a shock?
Is it like, well, “that’s impossible. That’s crazy. What are they going to do with that car” Pontificator.
You can Watch Somebody else do Business, or You can do Business
Well, what you’ll do is you can watch somebody else do business, or you can do business. In other words right now. And it looks like, I mean, again, I’m not going to pontificate when new cars are showing up. When people started having inventory again. But I can tell you one thing, if you wanted to buy a new Rolls Royce, you couldn’t find one. You want to know why? They’re all gone. And you know, when they’re getting more, never They’re all going to China. So in other words, if you want one, you are going to have to pay up. So that means they could have retailed two years ago for X, but now it’s going to wholesale for the same price.
We see it over and over and over again.
Now that don’t mean one that’s all hamburgered up chopped up, you know, wrapped and nine different people have owned it and that no, no, no, not, not that one. Cause that turns into a pure and absolute trashcan. So trashcans, aren’t cars, trashcans are trashcans. Right. And some of them are on wheels,and that has a home. But it just ain’t going to be the one where we’re saying in the general marketplace that we’re looking at right now. Like a human owned it, and it took care of it a little tiny bit. And now it shows back up in the marketplace and they bring too much money…if you’re a pontificator.
What they’re actually bringing is market value. Does that make sense to you, Sean?
Did you Pay too Much?
So at your auction yesterday, when dealers were like paying up a little bit here or there on a car and the other guys are looking around, making goofy faces, like they’re eating sour grapes or something.
Did you hear that yesterday at all? Sean, in your auction?
“You hear the crowd murmur”
“Oh my God, how did he step on his thing? Oh my God, what’s he doing?”
Okay, I’ll take exactly what he’s going to do. It happens to us on a weekly basis, the car, it looks like it was brought like Mars type moonshot type money dealer says, “Jeezus, I paid a lot for that car.”
Really? My answer always is, “could you please bring it back? I never would want you to pay…”
“Oh no, I can’t bring it back. I sold the b$t¢h.”
So then the question becomes, did you pay too much? No, the answer is, of course you didn’t pay too much. You paid arbitrage market value.
Not Selling it to the Bottom
And you had enough brains to not sell it to the bottom of the three other cars that are maybe similar, maybe not.
That you have to push a little. “So I can’t sell cars, if I can’t be number one, number six of the ranking of 27, can’t do it” So that’s where you get to pontification. In other words, data and processes that cause brain freeze. And it also puts common sense on the back burner. And the minute you put common sense on the back burner you’ve actually committed intellectual suicide.
So in other words, in our half knucklehead business that we’re in right? “Only halfway educated people, you know. Could have been a drug dealer. If I wasn’t a car dealer.” you know, the personality types, the “larceny” that’s in everybody’s heart and all the rest of it. Right? You can say all those pejorative things, right?
But the fact is common sense really is central to anybody that you could point to and say, this is a guy that actually has what they’re doing.
Now, if you give the information that’s necessary for those folks to make good decisions, you’re actually filing their pencil down to be more effective. And the more effective they are, they don’t spend time worrying about what somebody else is doing with the car because they’re actually focused on not selling Macadam, not selling pavement.
The Market Outlook
We’re going to be in a tight market for the next, I’m going to say for sure, two months. It’s probably going to be a four month period where we’re back to the euphoria of last year’s May, June, July, and August, where “there’s no way this could ever keep going” because it was completely crazy. Right?
But it kept going. Well, you know, in December, we started going back almost to reality and you know, the average sellers back to “no-saling” half or three quarters of their cars.
But at this point, if you’re presenting your stuff correctly at whatever level you’re going to get surprisingly good money for your vehicles. It basically comes all the way back to – “how’s the market?”
The market is starving for inventory.
Cater to Your Buyers Today
I’ll tell you the other thing that’s happening right now, with these acquisition things, where you’re gonna go on social media and you’re going to FaceTime with the seller and you’re going to do all kinds of things, right?
That over the next month, two months, three months is going to actually rebound to the point where everybody’s going to try to understand how:
And get a good Yelp from the consumer that you bought the car from, that had a lack of equity.
And now you’re going to do all kinds of things and tricks to make sure he gets the car and he’s happy. And he gives you a good review, right? That’s going to be over the next month, two months, three months.
That’s all going to pop back up because as people say, I can’t go to the auction and pay these prices. I can’t do that.
Digging into Service Drive
The only alternative would be to dig into your service drive.
And we’re not trying to over talk about what we have built for that to happen with the service drive tool and Accu-Trade, right?
In other words, next level everything, when you’re talking about how we’re going to know
and understand how you craft your conversation. If it’s a car you’re going to keep. If it’s a car you’re going to wholesale because you didn’t have an opportunity because it needs $4,300 in the shop and they can’t afford to do it.
Now you’re actually going to acquire it and push it to one of these knucklehead marketplaces and pick up your $2200 profit, right? Or be able to acquire it. And with enough room in it, do your repair.
So you’re no longer moaning with your service manager, how he’s trying to ruin you because you know, you’re trying to make a profit. And all he wants to do is ruin you with his RO in the shop. You see? So, I think what we’re going to see when we say “what’s the market conditions like?”
Flipping Rocks and Looking for Salamanders
We’re back to, we got to start finding out if your neighbor wants to sell their car, go on facebook, to the things with Craigslist, all of the things that you would normally do. Start flipping rocks, looking for salamanders, right? That’s back on full swing.
And again, not to be a Hawker here, but that’s exactly what our tool is built for to sit on those platforms, to be able to not only recognize, but to act on.
Leveraging our tool in this particular use case to know:
The means to know if you’re going to call Mr. and Mrs. McGillicutty and make them an offer they can’t refuse.
Summing Up – It’s Time to Clean Out
You see what I’m saying to you? You see what I’m saying to you? Sean-ie?
I don’t know if that’s a I would say is a comprehensible understanding of where we are in a market.
The market’s nuts it’s completely off the wall, goofy, nuts, wacko, crazy, unbelievable.
Where, when you’re buying trucks from Enterprise, which you could never buy, it’s like who in God’s name would buy a truck from Enterprise and you show up at an auction and it clips off 2,700. You see, take another look at your Enterprise trucks that have never had an internet look and think about placing that little baby under a hammer, see how it works out for you.
You see, because they’ve skyrocketed not because they’re spectacular,or have a good look to them. Of course, they have a horrible look, tiny little wheels, got nothing inside, but you see at this time when you have a complete fever in the marketplace.
Oh, no question about it. Now’s the time to clean that out. It’s time to clean it out and make yourself a wholetail profit. And in many cases, I’ll reiterate it more than you’re asking for the car retail. Absolutely. The broader arbitrage market will reveal it to the other best end or better end users.
Thank you to anybody that takes the time to get bored with these conversations. Have Fun everyone.
To check out more episodes of The VIN-dow Podcast visit: https://vin-dow-podcast.simplecast.com/episodes