Used-vehicle inventory remains historically tight, according to Cox Automotive. Buyers who would have purchased new are instead shopping for late-model used, and dealers are caught in the middle.
Joining us on the latest episode of CBT Now is Derek Hansen, SVP of Dealer, Lender & Inventory Solutions at Cox Automotive, who says the pressure is reshaping how dealers must think about inventory sourcing, departmental connectivity, and the role of AI across their operations.
Affordability impacting used-vehicle inventory
New car inventory is growing, but Hansen says the distribution is uneven. In recent years, automakers have favored higher-end models that are out of budget for many buyers. The more affordable vehicles buyers are looking for are often the hardest to find. Rising oil prices and geopolitical tension are compounding an affordability problem that was already squeezing buyers. The result, he says, is a used car market stretched thin.
"We're seeing more and more buyers that are having to trade off and trade down to late-model used that in recent times would have been new car buyers."
The sourcing solution
Hansen says the solution starts with sourcing. Dealers who want to serve the full spectrum of buyers need to think harder about where their used cars come from. The best opportunities, he says, may already be inside the dealership.
“As a savvy dealer, you make your money when you buy the car,” Hansen said.
Cox Automotive has been investing to connect the sales and service departments, opening up the service drive and existing client base as sourcing channels. Hansen says those customers are captive and underused.
Service dept. data underused
One of the most underused data points in the dealership sits in the service department. When a customer declines a repair order, that information has direct implications for what the vehicle is worth as a used car. Hansen says most dealerships aren’t feeding that data into the appraisal process.
“You know the declined ROs, the ones that they haven’t done that are real service items that are real gross, that will consume the gross potential on that vehicle as you think about retailing that vehicle as a used car,” Hansen said.
Hansen says Cox Automotive has been building the infrastructure to make that connection automatic.
AI-powered appraisals & searches
Hansen points to Cox Automotive Navigator as the platform pulling it all together. It connects Xtime, Vauto, and the dealership’s CRM and VIN tools, enabling data to flow between departments automatically. The result, he says, is a team better equipped to source and retail used cars simultaneously.
Hansen says the system uses AI to dig into a vehicle’s full history at the point of appraisal. Large language models add make and model-specific context, and flag deferred maintenance issues that could affect value. The platform also tracks appraiser performance across the dealership.
“It’s not as much gut and data points driving decisions, but it’s insights based off of your tools and helping fuel and supplement the team members that you have in the dealership,” Hansen said.
AI is also reshaping the consumer side of the transaction. Hansen says more buyers are finding vehicles through AI-driven search, and dealers need to make sure their inventory is showing up where those shoppers are looking. Hansen says dealers need to treat generative engine optimization as part of their merchandising strategy.
“More and more, they’re shopping via AI. So making sure you’re using AI so that your vehicles are appropriately merchandised, that they’re getting in this generative engine optimization, that they’re showing up where consumers are shopping,” Hansen said.
The road ahead
The market pressures Hansen describes aren’t letting up. But he says dealers who connect their operations and put better data to work are positioned to grow through them.
“Bringing the connectivity of the solutions together and using AI to put better insights at their fingertips ultimately empowers both departments to grow simultaneously,” Hansen said.
