Question from Ben Ourisman

Dale-
My name is Ben Ourisman and I am contacting you from Ourisman Hyundai Mazda in Laurel, MD. We spoke briefly at a presentation you gave in Northern VA several months ago; I made a comparison between you and Bill James if you recall.

We have added two of our group’s stores to vAuto since then and have had manic results; ground level general managers like the idea of knowing where their vehicles are priced in relation to the market, but for the most part still believe that 1) the internet only accounts for a small portion of their used car shoppers and 2) cost up strategy is still king.

Fortunately, some of the younger managers in our organization think to the contrary and accept the ideas behind market-based pricing.

My email this morning is more focused on the following question and less on the merits of our organization’s management:

When a user opens up the detail on a vehicle out of vAuto’s inventory list, several useful measurements appear underneath the market day’s supply of a particular vehicle. The one I have a question about is price/odometer relationship chart. The line representing the relationship seems to be based on a regression formula. What I am wondering is can vAuto publish the coefficient of determination or the correlation coefficient as it relates to the data? Obviously it is the low and high mileage vehicles where this becomes an issue, but if you all provided the coefficient of determination; I feel it would give us a more confidence on the strength of the relationship between the price/odometer regression formula and therefore a better understanding of where to price these vehicles which are sometimes statistical outliers. Any feedback on this would be appreciated.

Also, any plans for new vehicle applications? -Ben

Ben,

Rarely do I get asked questions about the coefficient variables on our regression analysis. OK – maybe never before. I’ll have to defer your question to our research and development department. By the way, where did you go to school, and why do you know this stuff?

I’m thrilled to hear about your “manic results”. I’m not surprised that some in the dealership embrace the philosophy, while others are slow to adopt it. I’ve come to understand that it is to be expected. Be patient, even the skeptics come around after a while.

Regarding your question about new cars, I suppose that it’s something we’ll eventually do, however, I’m not sure of its value when you can’t generally order the vehicles you really want, nor can you negotiate their price of acquisition. This leaves only the retail price in question, and I think that there is definitely some value in doing that. Please stay in touch with me as time goes on and I’ll keep you updated on our development plans. Please don’t hesitate to contact me at any time if I can be of assistance.

Talk soon. -Dale