Protecting Gross While Driving Sweet Spot Sales with a Data-Driven Pricing Strategy

September 20, 2023

How do you claim victory in the used car world? Answering that doesn’t have to be messy, but we as automotive professionals need to have a response. The best way to climb the used car ladder is through a complete understanding of industry trends to leverage years of selling insights. Mix in a little common sense and some gut reactions…and you’ll be on the path to get your lot ready for success this year.

Look, automotive retail has been a rollercoaster ride over the last few years. And, despite fluctuations and volatility, getting back to the basics can still lead us forward. As we survey the landscape headed into the end of the year, we have to ask ourselves some key questions about how to drive a proper pricing strategy.

  • How do we protect grosses? 
  • How do we achieve sweet spot sales? 
  • What is a proper data-driven plan for vehicle valuations? 

I’m not here to dance around the obvious. Protecting grosses while achieving sweet spot sales isn’t always easy. You likely have invested valuable resources into solving that problem already. On top of those efforts, you need to stay focused, sharpen your intuition, and deploy next-generation technology solutions that break complex data into usable insights. 

When you have a pricing strategy informed by this level of intel, you can best hit those 0-29 day sweet spot sales goals on your lot. To add color to the equation, an analysis of nearly 100,000 retail transactions over the last 12 months shows that vehicles retailed in the sweet spot had an average front-end gross of $2,314. On the other side of the coin, vehicles retailed 30 days and later had an average front-end gross of $874. 

That is a pricing differential of $1,440. 

If you are selling 100 units per month, that’s a 30-day income difference of $144,000. Do that math across a 12-month period and that total is about $1.7 million a year. I don’t know about you, but I can think of a lot of things that I could do with that extra money. 

So, with that much cash just waiting to be pocketed, how do you integrate a better strategy to achieve your goals? Using vehicle market data (MDS, Competitive set, risk level) and dealership performance data, you gain a better understanding of initial pricing. This helps maximize gross and gives your inventory the best chance of being retailed in the sweet spot. But be careful not all vehicles are created equal.

In today’s market with the right vehicle so hard to find, low market day supply vehicles or unique optioned vehicles need to be approached differently.  Percentage to market is less important, and the competitive set will likely be sold quickly meaning it won't be your competition for long. These vehicles are likely emotional purchases where finding one is half the consumer's battle. Simply put, maximizing gross on these vehicles is critical to the bottom line.

Conversely, high market day supply vehicles need to be looked at more deeply. These vehicles may perform better with your clientele than at other places. Understanding your store’s performance is important. On top of that, knowing how many vehicles are in the market will help you be more competitive. A market day supply of 120 with 100 cars in the market vs. 10 cars in the market is very different.

You need to get as much information as possible to answer the important questions. If you can’t figure out what is moving, why it’s moving, where it’s going, and how it got sold…then you are in trouble. A slew of data is at your disposal to help you make informed decisions. 

When the initial pricing strategy hasn’t sold the vehicle, third-party click-through data, CRM info on leads and visits, and changes in the competitive set allow dealers to decide if the price needs to be adjusted or if there are other reasons the vehicle has not sold, which you can always evaluate and improve upon. These reasons can include condition, sales process and training, or even slow recon. Identify the issues and remedy them as quickly as possible.

As we move into the end of the year, I want to help you protect gross and drive sweet spot sales on a daily basis. If you have any questions or want to learn how to leverage a data-driven pricing strategy, please contact me directly at