AFFORDABILITY IS RESHAPING THE USED-CAR MARKET One of the clearest examples of changing consumer behavior is found in used-vehicle demand. Rather than seeing strength concentrated in nearly new inventory, ACV’s data shows growing demand for vehicles between 10 and 15 years old. “We’re seeing accelerated demand slightly hotter than seasonal for vehicles between 10 and 15 years old,” Coles said. That reflects the reality of today’s consumer, as higher interest rates and elevated debt levels push buyers toward vehicles that offer reliable transportation at a lower monthly payment. “The average car on the American road right now is 13 years old,” he said. At the same time, franchise dealers are seeing continued demand for three- to five-year-old vehicles as customers search for alternatives to new inventory. CUSTOMERS ARRIVE INFORMED The internet transformed vehicle shopping years ago — and now artificial intelligence is accelerating the trend. Today’s customers often arrive with vehicle valuations from CarMax, Carvana or online pricing tools already in hand. “They’re going to walk in with a number and maybe unwarranted confidence on the value of that car,” Coles joked. That means pricing information alone is no longer enough to differentiate a dealership. Instead, Coles argued that community involvement, trust and personal relationships will become even more important as consumers gain access to more information. “Every consumer walking in will be on their phone, have three different prices, and you have one shot at reminding them how you’re connected to the community before they leave,” he said. AI WORKS BEST BEHIND THE SCENES Although artificial intelligence dominated much of the conversation throughout the convention, Coles offered a more measured perspective on where it can create value. He believes dealerships should resist the temptation to place AI directly between employees and customers. “There’s a trend in the industry to push more and more to have AI as a customer-facing layer. I feel very strongly that’s a terrible idea,” he said. Instead, he sees the greatest opportunity in back-office functions such as inventory management, staffing, lead routing and process automation. “The chatbot era of okay answers is over,” Coles said. “Speed to a human is key.” For dealers eager to adopt AI, his advice was simple: Start small, identify internal champions and focus on solving specific operational problems rather than chasing every new tool that enters the market. “If you deploy nine pilots, you will get zero successes,” he said. THE DOC’S FINAL GUIDANCE For all the discussion of inflation, vehicle values and AI, Coles returned to a simple conclusion: Dealers cannot wait for the conditions of the pandemic-era market to return. Success over the next several years will come from adapting to thinner margins, understanding affordability-driven consumers and using technology to strengthen — rather than replace — the human relationships that have always defined retail automotive. “The differentiator is to delight and serve the community,” he said, “not just transact.” Monthly MAX Customer: Retail Profit Index Retail Profit Summary: ACV’s Monthly Front-End Gross calculated based ACV Dealers with 2018/2019 as Monthly Baseline Index for “pre-covid” profit. • May 2026 Profit Index remained slightly elevated compared to baseline. • Adjustment in May Driven by Inflation adjustments and softened consumer demand. Market Update: ‘26 Early Monthly 2025 ACV Wholesale Adjusted Monthly Price Index by Vehicle Age Band. Vehicle age bands are calculated based on the model year of the vehicle and then grouped into year ranges with a consistent mix of vehicles in the basket. Vehicles in the basket have at least 10 vehicle sales/week for combination of Year, Make, Model, Trim, Mileage and Condition Status. vada.com 15
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