As dealers evaluate their used vehicle performance for 2025, many will ask a question: What can we do to improve our grosses and overall profitability?
That’s a question used vehicle director Drew Hall of Cloninger Auto Group asked as he closed the books on 2024. The question led him to analyze how and where his stores were acquiring used vehicle inventory.
“We looked at what % of sales came from each source, what % of profit came from each source and our gap as we worked deals,” Hall says.
The analysis immediately revealed this nugget: “Auctions weighted heavily in overall sales, almost 40 percent,” Hall says. “But the actual outcome was almost detrimental to us.”
This insight led Hall to develop a source channel-specific acquisition strategy for each rooftop. The overall goal: Find ways to reduce the dependency on auction vehicles in favor of prioritizing and pursuing inventory in other channels that produce more favorable profit outcomes.
Today, as Hall looks ahead to 2026, he credits this channel-specific strategy shift for helping the group improve profitability while maintaining their volume objectives. “Our grosses have increased a bit year over year, thanks to some of the processes we started at the beginning of the year. We’re maintaining an even line and haven’t seen the drop-off we’re hearing from other dealers.”
Five key elements of a source-focused acquisition strategy
1. Know your source channels. This should be a required to-do for every vehicle. Without it, you have no real way of knowing how many vehicles you bring in from each channel, much less how they perform. At Cloninger, Hall tracks the following channels: Appraisals, auctions, sight unseen, service lane. street purchases and trade-ins.
2. Analyze each channel by profit/volume contribution. Hall found an opportunity to put more effort and support into service lane and street purchases. With street purchases, Hall has team members scouting Facebook, Autotrader and private party listings for inventory. “Our street acquisition percentages have climbed,” he says. “We’re still not where we want to be. But striving to get better and seeing improvements. That’s what we’re looking for.”
3. Make your offers count. As Hall’s team has worked to acquire vehicles from customers, they make aggressive offers when a vehicle’s metrics line up. Appraisers look at Market Days Supply, Strategy Actions, Vehicle Grade and other factors to assess whether the vehicle is right for the inventory and the moment. When the metrics line up, “we go after it like we’re in an auction lane,” Hall says. “We extend that same courtesy to the customer. We are still cautious but I’d say we’re more aggressive with a trade-in or off-the-street purchase than others.”
4. Recognize the value of a customer-acquired vehicle for the next buyer. When you acquire a vehicle from a customer, you have an opportunity to know more about the vehicle’s ownership and history than if you purchased it from an auction. Such details are important to the next buyer, who often appreciate, and pay for, knowing the full story about their purchase.
