Will Velocity work for new cars?

April 27, 2009

Hello Dale,  Hope you are well. I was going to send you a note the other day to tell you that you should be on twitter and then sure enough I found you there. I should have known better.

So I have a question for you; how do you think the velocity model would work for new cars? I know we’re talking about a different animal but I think there is some merit in exploring the application for the model. I’m sure you’ve considered this before. Let me know what you think. – J.


I saw you follow me on Twitter. Thank you. The velocity model will absolutely work for new cars in a theoretical sense. This is because the new car market is even more of an efficient/rational market than used. Therefore, principles of supply, demand and price sensitivity govern.

The problem, however, with the practical application of the velocity model in the new car business, is that unlike your used car business you can not control what you stock or how much you pay as you do in the used car business. In other words, you’re subject to constraints of the manufacturer. This is why I think that the used car business is so exciting and important.

Thanks for the question.