The Market Adjustment metric reflects the difference between a dealer/market price and the Manufacturer's Suggested Retail Price (MSRP)
Where is Market Adjustment located in the platform?
Users will be able to toggle on "Market Adjustment" and "Market Adjustment %" within the settings of the Performance Data table in Market Insights, and the metrics will be usable at both the dealer and market levels.
What is Market Adjustment?
The Market Adjustment metric reflects the difference between a vehicle's selling price and Manufacturer's Suggested Retail Price (MSRP). This adjustment can be positive or negative and is a direct indicator of supply and demand dynamics for a specific vehicle model in the market.
Here's how it functions and why it's important:
- Positive Adjustment: Indicates that a vehicle is being sold above its MSRP, usually due to high demand, limited supply, or a combination of both. This scenario often occurs with new, popular, or limited-edition models.
- Negative Adjustment: Signifies that a vehicle is being sold below its MSRP, often due to oversupply, decreased demand, or competitive market pressures. Dealers may lower prices to accelerate sales and reduce inventory holding costs.
Market Adjustment offers insights into consumer preferences, economic conditions, and market competitiveness. It helps dealers and brands to strategize pricing, adjust inventory levels or re-allocate inventory, and identify opportunities for promotions and incentives.
Market Example
Toyota Tundra:
The Market Adjustment for the Toyota Tundra indicates that, on average, Tundras in the Houston, TX market are selling for $1,234 less (2% less) than the Manufacturer's Suggested Retail Price (MSRP).
For Toyota, this is good news as they are able to maintain one of the highest turn rates in the market at only a small discount from MSRP. This shows that the Tundra has plenty of demand, and Toyota could even consider reducing or eliminating incentives on this model.
RAM 1500:
The Market Adjustment for the RAM 1500 indicates that, on average, RAM 1500s are selling for $5,400 less (8% less) than their MSRP.
Unlike the Tundra, the RAM 1500 has one of the largest discounts and lowest turn rates in the market (32%). This means that RAM is having trouble efficiently selling its inventory of this model and may need to consider increasing marketing spend on the RAM 1500 to bolster demand or reallocate some supply to markets with more demand.
Dealer Example
Westside Chevrolet:
Westside Chevrolet has a relatively small Market Adjustment (-4%) compared to its competitors as well as a high turn rate (66%) and a good amount of sales (31). This shows the dealer is in a great position in the market.
Sterling McCall Chevrolet:
On the other hand, Sterling McCall Chevrolet has a much larger Market Adjustment (-17%) and a much lower turn rate (43%) despite their sales number being one of the best in the market (84). This information indicates Sterling McCall Chevrolet likely has a lot of supply, and is having to steeply discount their vehicles to maintain healthy movement. To improve their market position, the dealer might want to consider increasing branded advertising to drive more foot traffic to their store.