The Secret Formula for Smarter Used Car Sourcing
By Craig White | Profitable Pre-Owned
You can’t out-price the market anymore — you have to outsource it.
For years, most buyers have leaned on a single metric: Market Days Supply (MDS). The problem? MDS treats every vehicle the same — even when demand is wildly different at the trim level.
The pros have moved on. They’re using a smarter blend of data to identify which cars actually move metal and when to step up on them.
That blend is what I call the Secret Formula.
The Formula
Low LMDS + High Scarcity Index + Positive Strategy Need + B– or Better Provision Grade = Velocity Inventory
This isn’t theory. It’s a repeatable process that uses real market signals — not guesses — to find the cars that turn fast and protect gross.
1. LMDS (Like-Mine Days Supply)
Where MDS lumps everything together, LMDS looks at how fast your exact unit sells — year, make, model, trim, drivetrain, even equipment packages.
Example:
A 2022 Toyota RAV4 might show a Market Days Supply of 62.
But a 2022 RAV4 XLE? Its LMDS could be 32.
That’s real demand — the kind that actually drives velocity.
Target: LMDS under 40 days (ideally < 35).
2. Autotrader Scarcity Index (100 – 1,500 Scale)
The Scarcity Index measures live shopper demand versus available supply. The higher the score, the tighter the market.
- 300 + = Strong Demand
- 600 + = High Velocity
- 1,000 + = Extreme Demand
If you’re only looking at pricing or rank, you’re missing the story behind why those vehicles sell fast. The Index exposes where buyers are already lined up.
3. Strategy Need & Provision Grade
This is the reality check.
Stockwave’s Strategy Need tells you whether the unit fits your lot mix.
vAuto’s Provision Grade shows confidence in both turn and gross.
Aim for:
✅ Positive Strategy Need
✅ B– Grade or Higher
4. Putting It Together – The Velocity Example
| Metric | RAV4 XLE |
|---|---|
| LMDS | 32 days |
| Scarcity Index | 420 (Strong Demand) |
| Strategy Need | Positive |
| Provision Grade | B + |
Result: Velocity Car — high demand, low supply, fast turn. That’s a unit you can buy confidently and retail twice before your competition even adjusts their pricing.
💡 5. Bonus Tip – See It All in Your Glance Box
If you’re using vAuto, you can add the Autotrader Scarcity Index module directly into your Glance Box view. This integration was made possible 5 years ago thanks to a suggestion I gave to Patrick Janes, AVP, vAuto Solutions, after I relied on static spreadsheets from my Autotrader rep. Now, you can see LMDS, Scarcity, Provision Grade, and Strategy Need side-by-side in real time.
It’s one of the simplest upgrades that separates the “data curious” from the “data driven.”
6. How to Apply the Formula in Your Store
I know this might sound a bit drawn out, but the car pictured above is the very one I used when I first discovered this formula back in 2017. While it’s a 2013 model in 2017, it’s the same make and trim, and remarkably, nothing major has changed on this car in six years. As a Regional buyer overseeing 24 stores, I’ve seen eight stores with a strong, positive strategy for this vehicle—it ticks every box but one. The only thing holding it back is a C– Provision grade instead of a B–. Even so, this is a textbook Profitable Pre-Owned opportunity.
Despite the lower grade, there’s still considerable upside. You could comfortably pay well above MMR and still clear a $5,000 profit.
Follow this plan:
- Pull your Stockwave list and sort by LMDS.
- Layer in the Autotrader Scarcity Index (100–1,500 scale).
- Filter for Positive Strategy Need + Grade B– or better.
- You’ll instantly see which cars are velocity winners and which are dead weight.
This is where real inventory control begins — not with markdowns, but with smarter sourcing.
Final Thought
You can’t spend your way through a slow turn anymore—you have to think your way out. Dealers who grasp LMDS and Scarcity are always a step ahead, spotting opportunities before the rest.
This isn’t about chasing the cheapest cars—it’s about chasing the fastest movers. When you combine data, discipline, and demand, your inventory becomes a profit engine.
“That’s not just a solid used car—that’s a Profitable Pre-Owned.”
This is the future of sourcing: driven by data, exact to the trim, and relentlessly focused on profit.
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Want the full framework with examples, thresholds, and a velocity score sheet?
