You know your customers and the vehicles that tend to work for your dealership. But when you’re deciding what to buy next to optimize your dealership inventory mix, it can also help to understand what’s happening beyond your own lot.
Market Days Supply can give you another view of your market by helping you understand the balance between the number of similar vehicles available and how quickly those vehicles are selling. Used alongside your own experience, this information can be helpful as you evaluate whether to buy a vehicle or not.
So, what does Market Days Supply tell you—and how can you put that information to work at your dealership?
What Does Market Days Supply Tell You?
Market Days Supply, or MDS, is an automotive metric that looks at the number of similar vehicles available in a market compared with their recent rate of sales, or how quickly that type of vehicle is selling.
Simply put, a lower MDS means cars are selling fast compared to how many are available. A higher MDS means there are more cars sitting on the market than are selling.
When combined with your own sales history and reliable vehicle market data, MDS can help you see that supply-and-demand picture before you buy.
The metric isn’t a prediction of exactly how quickly a specific vehicle will sell. How MDS is calculated can also vary by data provider, market area and time period. Consider the MDS as one factor when evaluating whether to buy a vehicle for your lot.
Why MDS Alone Isn’t Enough for your Dealership
Market conditions are useful, but you know your dealership and customers best.
A lower Market Days Supply doesn’t automatically mean you should buy a vehicle. And a higher MDS doesn’t necessarily mean you should pass.
Before making a purchase, think about factors specific to your dealership, including:
- What your customers regularly ask for
- Which vehicle types have worked well for your dealership
- Which price points fit your customer base
- How much reconditioning or other investment the vehicle may require
- The condition of the specific unit you’re considering
MDS can help you assess whether a vehicle fits your customers, pricing strategy and inventory goals.
Compare What’s Happening in the Market With What’s Happening on Your Lot
This metric can also give you another perspective as you think about your used car inventory mix.
Your inventory mix is the combination of vehicles you choose to stock. That could include different vehicle types, makes and models, price points and other characteristics that matter to your customers.
There’s no single inventory mix that works for every independent dealership. Instead, compare what you’re seeing in the broader market with what you know about your own customers.
Consider questions such as:
- Are customers regularly asking for vehicles you rarely have available?
- Which vehicle types generate the most interest?
- Which price ranges tend to work for your customers?
- Are some types of vehicles taking up more of your lot than their sales would suggest?
- What does current market supply look like for vehicles you’re considering?
Bringing those perspectives together can help you be more intentional about your dealership inventory mix while still relying on what you know about your business.
Add More Context With Vehicle Evaluation Tools
Market Days Supply can help you understand supply and demand, but you may want more information when it’s time to evaluate a specific vehicle.
Pricing and other vehicle market data can help you take a closer look at a specific unit and how it compares with the market.
Tools like autoniq® give dealers access to real-time market data, pricing guides and market reports. Features like the autoniq® Profit Guide break down local retail demand, wholesale supply and average days to sell to give dealers a clear picture of market velocity before buying.
Using these resources can help you research a potential purchase before deciding whether it belongs on your lot.
Want to learn more? Explore our guide to autoniq® vehicle pricing and evaluation platform.
Inventory Mix and Inventory Sourcing Aren’t the Same
Knowing what you want to stock and knowing where to find it are two different parts of your inventory strategy.
Inventory mix: What vehicles make sense for your lot?
Inventory sourcing: Where can you find those vehicles?
Understanding your customers and market can help you get clearer about what you’re looking for before deciding where to find it.
Looking for more ways to find vehicles? Explore our 4 Benefits of Online Auto Auctions for Independent Dealers blog.
Turn Market Information Into Your Next Inventory Opportunity
Good inventory decisions start with asking the right questions. What are your customers looking for? What’s already available in your market? And does the vehicle you’re considering make sense for your lot?
Market Days Supply gives you another way to answer those questions before you buy.
When you find an eligible vehicle that fits your dealership, AFC can help you finance the purchase. Our flexible floorplan financing solutions give independent dealers purchasing power to source eligible inventory while helping keep cash available for other dealership needs.
Learn more about AFC floorplan financing or get started today.
Frequently Asked Questions About Market Days Supply
What does MDS mean?
Market Days Supply is an automotive metric that compares the number of similar vehicles available in a market with their recent rate of sales. It can give dealers additional information about market supply and demand when evaluating whether to buy a vehicle or not.
Is Market Days Supply the same as days in inventory?
No. Days in inventory looks at how long a particular vehicle has been held by your dealership. Market Days Supply looks more broadly at the number of similar vehicles available and how quickly those vehicles are selling in a market.
How can independent dealers use Market Days Supply?
Independent dealers can consider Market Days Supply alongside customer demand and their overall used car inventory mix to make smarter purchasing decisions. Together, those data points can provide additional context when evaluating whether a vehicle makes sense for their dealership.
Where can independent dealers find Market Days Supply data?
Independent dealers can find Market Days Supply and related market data using vehicle pricing and evaluation platforms like autoniq®. Through features like Profit Guide, autoniq® provides real-time local retail demand, wholesale supply and average days to sell to support purchasing decisions.
*Disclaimer: AFC does not guarantee any results for floorplan financing and examples are for illustrative purposes only. Dealers should consult their own advisors to make independent business decisions regarding floorplan financing and inventory sourcing. “autoniq®” is a trademark of Autoniq, LLC, licensed to its affiliate AFC. “AFC” refers to Automotive Finance Corporation, Automotive Finance Canada Inc., and AFC Cal, LLC in their respective jurisdictions.
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