The seasonal pattern, and why it should not matter
You're probably going to want to check out the video on YouTube, Facebook, or LinkedIn, because I'm going to go over a lot of charts and hopefully make it quick. If you've been in the business a long time, you know that after the spring tax season push, it lays down a little in April, May, and June. I've been talking about it in previous videos. Then typically after the 4th of July holiday we get a little push between the holiday and August when school starts, and then it starts slowing back down again.
With that said, I'm going to go over some trends and metrics of what's going on in the market. But if you do things right, it shouldn't matter. The market won't matter. Like David Long always says, you create your own economy.
Shopper index down 30%, listings up
Within our LotWalk tool we track some trending metrics, so I'm going to go over a few of them. One is the used car shopper index on Google Trends. If you go back to March 29th, the peak of this tax season, that's the 100 mark in the last 12 months, and it's really dropped off. That 100 dropped to 69. That means the market shopper count dropped about 30%. Where we were this time last year was 68, and right now we're at 69. Last year we had a little bit of an uptick in this July window, and we're starting to see that now.
The other thing I wanted to point out is used car listings year over year. 1.49 million on AutoTrader, 1.2 million on Cars.com. It got as low as 1.42 million and 1.2 million on Cars.com in that March window when tax season was happening. Since then it's jumped up to 1.542 million and 1.4 million. So there are more used cars listed in the market and fewer shoppers.
Black Book, if you take a look at their report from yesterday, is indicating the same thing. As this slows down, wholesale prices are dropping by segment, and it dips down again going into the rest of the year. One thing I wanted to point out: retail prices haven't dropped as much, because dealers are sitting on aged cars. They don't want to take the losses yet to get the cars moving. There are more vehicles available with fewer shoppers, so we're starting to drop our prices, but not as aggressively as we need to. If you look at 2025, we tend to hold out and then get aggressive.
If you look at retail listings from the beginning of the year, there are more cars this year than in the two previous years. There's no shortage of used cars. I keep talking about that, and over the years everybody fought me on it. Black Book's average retail age, which is the average age of the cars out there, is roughly 34 days now. But that's because of an influx of new inventory coming in. And wholesale is trending down.
Two-week sale rate: 43% last year, 37% now
One of the charts we do in our system, I combine manually once a week. Every Tuesday when Black Book updates, I update the shopper count in red, which has been dropping, and in green is our dealers' volume, which has dropped with it. The overall average dealer right now is at 37%. That's as low as it's been in a long time. This time last year there was an uptick from June to August 5th in volume, and around July 1st to July 8th last year it was 43%. That's a two-week sale rate. You take 43 times two, that's 86% of the inventory being sold at our average dealer in a month. It's down to 37 now, which is 74%. So that's a good drop-off in volume in the market, which has caused the blue line, wholesale, to drop. Wholesale sold percentage, what's selling at the lane, has dropped because dealers don't need cars. And that's going to cause the average age of cars to go up.
So what's going on with the average age? A couple of things. I looked at CarGurus, and we look at their age buckets. You can see how their 0 to 30 has built up. There are more fresh cars out there. The next thing you see is the 30 to 60-day-old stuff. Since March 26, the middle bucket has more cars in it, which has then led to more cars in the aged bucket. So these cars are sitting. Shopper count is down. All that activity is moving in the wrong direction. There are more cars available and fewer people looking for them, maybe due to interest rates still being high, and what's available isn't always the latest and greatest car. You can see the influx of trucks being listed on CarGurus, the influx of SUVs. And there are even more fresh cars coming into the market, which is what's keeping that average age down.
So it looks like a 34-day average day to sell, but we're going to see that number creep back up. If you go into last year, from May to June into August, retail days to turn was as low as 34 and jumped up to 42, because shopper count dropped, dealer volume dropped, and cars started sitting. So that's the economy. If you're slow, you've got to look internally, and this is where I say if you do the right things, the market won't matter.
A Missouri independent that tripled its VDPs
Let me show you a post I did the other day. This is an independent dealer in Missouri. They started to get more disciplined on turnaround time, and more disciplined on being proactive on pricing sooner rather than later, even if reconditioning took too long. Don't say, well, it took 15 days, so let's act like it's day one and give it a couple of weeks at a premium price. Then you're running into a 30-day-old car before you start adjusting realistically. And in that two-week window it took to turn around the car, the market probably dropped 500 to a thousand dollars.
But look, they started doing things right. Go into January, when all that stuff was going down, then look at their June. This is connections. The lead count is going up. Their VDPs went from 10,000 to 25,000 in June. Last June it was 10,000. 10,000 to 25,000 VDPs, and a good chunk of that came from fixing under-merchandised listings: missing photos, missing price. You drive that down and you start paying attention to photos and descriptions. That was Cars.com.
Now take a look at their CarGurus. This is VDPs per vehicle, so it doesn't matter if they have more or fewer cars, and they carry about the same. Last June this dealer had 123 VDPs per vehicle. This June was 304. Almost tripled. Go to May, it was triple. But the big difference, and this is where you create your own economy, is the competitors in his market. Last year they were at 150 and beating him. Their 150 dropped to 145 this year. So he's at double what his competitors were, and this time last year he was being beaten. And this is an independent dealer. He has to purchase a lot of his cars, barely gets trades, has to transport those cars, has to service those cars. He's carrying a good chunk of inventory, yet he's able to turn it. He doesn't have the luxury of a new car franchise getting trades and high-volume new car business.
Photos, colors, and the follow-up that comes with more leads
So as I showed you, the market's been soft. Everybody across the board has slowed down. There's less volume out there. But how you react to it is discipline on tight photos and descriptions. We go through a lot of their cars on our weekly calls with our dealerships. Any cars with no leads, or no leads and no switches, or any car that's priced aggressively where activity is low, we dig through and make sure the photo order is good, meaning the premium stuff, the sunroof, the second-row captain's chairs, heated seats, remote start, Apple CarPlay. All those features are in the photos at the very beginning, and they're definitely in the description. That's how you get more SRPs and VDPs.
Make sure your color combos are showing up. I showed you one time where a dealer had 100 cars in stock and about 30 of them didn't have an interior color showing. It wasn't that they didn't put an interior color in. Some of these OEM interior color descriptions are hard, and the sites don't understand the color code. They had the factory interior color, but sites like Cars.com and CarGurus didn't recognize that it's pretty much just gray. So put gray in there instead of the manufacturer's color scheme, unless it's a particular hot color or a higher-dollar feature. Lower-funnel customers search black with tan, black with gray, white with gray, white with tan. You want to show up for those. Make sure your inventory is tight.
The next thing, and this is where this dealer is struggling, is that their lead count doubled. They have four people handling twice as many leads now. The follow-up they're doing is the low-hanging fruit: contacting the fresh leads or anybody getting back to them. It's the older leads we need to work on to keep the momentum going. They've got well over 50% of their cars going out in the first 30 days. They're close to a 100% sale rate, carry 120, sell 120. They're getting really disciplined, really clean, and grabbing a lot of activity. But now that the activity is there, they have to make sure they follow up with it. If you've got an active lead and the car's still in stock, reach out every two to three days. If you've got a 30-day-old lead, divide that by three. You should have at least 10 contacts on that lead.
That's the stuff we're doing. We're looking at not only how your inventory is sitting, what you're heavy or light in by segment, price point, and age bucket. We're disciplined enough to make sure the 30 to 60, that middle bucket, doesn't grow past 30%, so the age isn't bleeding through. And in the meantime, as we're driving more leads, you've got to make sure you're following up with them.
The market condition is a little tough right now. Hopefully we get a July surge, that uptick after the holiday. We'll see more next week. If it doesn't come, then pretty much from August through December the market starts slowing down. As August wraps around, people go back to school and settle into a schedule. You should get a little bit of an uptick from back-to-school business: I've got a high schooler now and they need a car, that kid going away to college needs a car. That's probably going to be on your cheaper cars for this window of time. But also keep an eye on manufacturer incentives. If there are big incentives out in August and model-year clearance stuff, you're going to have to compete against that. That's stuff we do every week with our dealers, keep them on their toes, keep their business moving, and keep them clean. If you'd like to know more, go to lotpop.com.
Transcript lightly edited for readability from the live stream. Watch the video above for Jasen's screen share.
