What is PremiumXchange™ and Why Should You Care?
I am as excited about PremiumXchange as I have been about anything we have launched to date. PremiumXchange is an immensely powerful tool that works in conjunction with the main CarOffer platform and does things nobody in the US auto industry has ever been able to do before. It is the first national non-affiliated online pre-owned vehicle exchange desk that allows dealers to exchange vehicles with one another across the country at prices set by the dealers themselves.
Utilizing CarGurus’ proprietary Instant Market Value (IMV) technology, which provides the fair retail price specific to your zip code, dealers can capitalize on market disparity across regions. Differing regional demand and market dynamics greatly affect inventory value from one dealership to another. Identifying these trade scenarios instantly from a pool of hundreds of thousands of vehicles will give dealers a powerful new tool to manage their inventories.
The Power of Our CarGurus Partnership and Instant Market Value
Last year we sold 51% of the company to CarGurus. We did that for a couple of reasons. First, this allowed us access to the thirty million consumer visitors on the site every month. And second, it provided a treasure trove of data. The data they have is from a market perspective, specific to zip codes, otherwise known as Instant Market Value (IMV). IMV is an estimated fair retail price for a vehicle based on a detailed analysis of comparable current and previous car listings in your market. The IMV calculations are updated daily using a complex algorithm that considers millions of data points including make, model, trim, year, mileage, options, and vehicle history. With IMV, we think PremiumXchange is the most accurate platform in the country simply because it goes all the way down to options and it has more listings than any other platform.
What Does Trading Market Disparity Mean?
We’ve had dealers state, “you are trap trading here,” or “you’re trading water or negative equity.” That is exactly what we are NOT doing. What we are doing is trading market disparity. One dealer's piece of coal in a market is another dealer's diamond if you will. Let’s take a real example from one dealer with a Honda Civic here in Nebraska that I could take down to Texas and the difference in price on that particular car is $8,500. That’s market disparity.
Then we had a Subaru Forester that had an $8,000 disparity from Wisconsin to Mississippi. This market disparity exists on thousands of makes and models across the country. What we are doing is capitalizing on that market disparity so you can move a car that is performing poorly, one that you can’t sell that is aging on your lot, and trade it for a premium price to a dealer in another market. Because in a different market it makes much more sense than it does in yours. With PremiumXchange you can then bring in a car that you are likely to perform very well with and have adequate retail profit margin built into that car when it lands.
How it Works
Let’s say you have a car that is 88 days old, you have not been able to retail that car. Your sales associates are walking around it. The auction price on this car is $19,347. Your cost on the car is $24,496 and your Internet price is $22,000, So you have basically got this thing priced $2,200 under what you have in the car, trying to move the car. Well, I’ve got a proposal here with PremiumXchange where we believe that you can make a lot more money for that car today. Mitigate that wholesale loss considerably and let’s get a car in here for you that you can turn quickly and make a great front-end profit.
PremiumXchange will automatically pull in your cost and your ACV. You can play with this number in the system. As soon as you put the number into the box, the platform calculates what the thresholds from each of the various indexes are for this car. So, in this example, you could click on Black book, and it tells you that the car is $2,450 above Black book clean. You can click auction and it will give you the auction ratio. You could click JD Power, NADA, it's going to do the same thing. Why this is critical is that whatever index or book you pick here is going to be your trading delta.
For a full video demonstration and explanation click here.
Founder + CEO of CarOffer