Refresher: Market Days Supply And What It Means

December 3, 2015

I thought it’d be useful to share my e-mail exchange with a dealer who got stuck interpreting the Market Days Supply for a used vehicle.

The dealer: “I am sitting here pondering a question with vAuto and need help to solve this in my mind. How can you have a high volume (high demand) vehicle (Chevrolet Impala) but that vehicle can have a high market days supply (190 days)?”

Me: “Thanks for the question. Market Days Supply (MDS) is derived by a calculation that divides current available supply by the average daily retail sales rate over the past 45 days. The answer to your question is that in spite of high volume (i.e. your denominator), there is also extraordinarily high supply (numerator), which derives a high MDS. Given this condition on your Impala, it is likely to sell fast, assuming it is priced very aggressively from the onset. Therefore, it becomes especially imperative to own the vehicle for the proper amount of money to make a respectable investment return. I hope this helps.”

The dealer: “Dale, thanks so much for solving this!”