The used car market in 2026 is shaping up to be one of the most challenging acquisition environments dealerships have faced in years. While sales opportunities look strong, the tighter the market gets, the harder it becomes to keep your lot stocked with the right inventory. That's why data-driven buying strategies aren't just nice to have anymore—they're absolutely essential.
Frank Knox, founder of AutoAcquire AI and a former CarMax executive who helped build the blueprint for modern acquisition strategies, recently joined the LotTalk podcast to break down what dealerships need to understand about acquiring inventory in today's market. His insights cut through the noise and get straight to what matters: buying the right cars at the right price using the right approach.
Here's a fundamental truth that gets lost in the daily grind of acquisition: if a vehicle is worth $25,000, its value is $25,000. Period. That value doesn't change whether you acquire it from a trade-in, a service drive walk-in, or standing in an auction lane eating a dollar hot dog.
What does change is your cost of ownership.
When you buy from the auction, you're adding PSI fees, buy fees, transportation costs, and all the other expenses that come with that channel. Yes, your margins will compress because your cost basis is higher. But that doesn't mean you should avoid auctions—it means you need to understand the economics and plan accordingly.
"A car is worth what that vehicle is worth," Knox explained. "The question becomes, what is that car worth to you? You may determine that car is only worth $21,000 to you because you have a $2,000 pack in your shop, your shop needs to eat, and you're going to put $1,500 into reconditioning. But other dealerships and big competitors aren't playing by those same rules."
The key is understanding that if you do a good job of feeding the beast—bringing in more of the right inventory based on what you actually sell in your market—you'll improve your opportunities to acquire from lower-cost channels like trade-ins. Better inventory selection creates a virtuous cycle.
One of the biggest mistakes dealerships make is writing off entire acquisition channels because of a few bad experiences. Knox was clear: "There are no bad channels for acquisition, only bad disciplines to the acquisition approach."
Whether you're buying at physical auctions, online platforms, or directly from consumers, success comes down to having a disciplined strategy. That means knowing exactly what you need before you start shopping, setting firm buying parameters, and sticking to them even when it gets competitive.
The problem isn't the channel—it's the lack of a systematic approach to using that channel effectively.
In today's market, gut-feel buying is a recipe for disaster. Knox emphasized that every acquisition decision should start with your historical sales data—what you've actually sold, not what you think will sell.
"There is no world anymore where you can use your gut feeling to say, 'I think I'm going to sell this thing. I think it's super cool,'" Knox said. "If your data tells you that as great as it looks, you know, there are some really good-looking paperweights as well. Maybe what you're doing is buying that car to be a paperweight that ends up in your dealership."
Your historical sales data tells you which makes, models, trim levels, and price points move in your market with your customers. That's your buying guide. When you deviate from it, you're speculating—and speculation ties up capital and lot space.
Market day supply has become the industry's go-to metric for pricing decisions, but Knox argues that scarcity deserves equal—if not greater—attention.
Market day supply tells you how fast a vehicle moved 30, 45, or 60 days ago in an imperfect market. It's useful context, especially when you're not the best end user for a particular vehicle. But it doesn't tell you how that vehicle will retail today in your store, in your market, with your customers.
Scarcity, on the other hand, tells you what's actually available right now. If you need a specific make and model that historically sells well for you, but there are only three available in your entire region, you need to adjust your buying strategy accordingly. Sometimes paying a premium for a scarce vehicle that fits your strategy makes more sense than buying readily available inventory at a "good" price.
Knox shared an example from his CarMax days: "I watched one of the CarMax senior buyers in the lane, and he bought two cars back-to-back. One of them he paid $1,800 over MMR. The next one, he paid $1,200 under MMR. I asked him, 'What's your strategy?' He said, 'I'm going to average these two cars out. One's going to allow me to pay up for the other.'"
That's strategic buying based on scarcity and need, not just chasing the lowest price.
Acquisition doesn't end when you win the bid—it ends when the car hits your lot ready to sell. Knox stressed the importance of understanding your reconditioning capabilities before you commit to buying.
"You've got to know things like parts availability," he explained. "From day one, understand what potential recon time constraints you may have because your shop may not be equipped for an abundant amount of acquisition."
If your shop can only handle 10 cars a week but you're buying 25, you've created a bottleneck that costs you money every single day. Vehicles sitting in recon aren't generating revenue—they're consuming it. Smart acquisition means buying within your operational capacity to turn inventory quickly.
Knox introduced a powerful acronym for thinking about acquisition strategy: CARS.
Clarity: Know exactly what you need based on your data and market position.
Accountability: Hold yourself and your team accountable to buying what you actually need, not what catches your eye.
Results: Deliver measurable outcomes based on the clarity and accountability you've established.
Standards: Maintain high standards that broaden your available resources and time to acquire inventory effectively.
This framework creates a disciplined approach that keeps your acquisition strategy focused and measurable. When everyone in your organization understands and follows CARS, you eliminate emotion-driven buying decisions and replace them with data-driven discipline.
One of the most overlooked acquisition channels is right in front of you: your appraisal desk. Knox emphasized that dealerships should be winning at least 30% of their appraisals.
When customers come to you to trade in or sell their vehicle, you have a massive advantage. You're seeing inventory before it hits the open market. You can make instant offers. You eliminate transportation costs and auction fees.
If you're winning less than 30% of your appraisals, you're either appraising the wrong vehicles or you're not being aggressive enough with your offers. Use your data to identify which vehicles you should be fighting to acquire, then make competitive offers on those specific units.
The complexity of today's market demands analytical horsepower that most dealerships simply don't have in-house. Knox recommends either hiring a dedicated data analyst or partnering with services that provide that expertise.
"Having a true data scientist at your disposal to find those windows of time when inventory falls into your strategy—that's critical," he said. "You may not be able to equip your dealership with somebody glued to a computer all day long, but there are resources like AutoAcquire AI that can be that data scientist for you."
The right analytical support can identify buying opportunities you'd never spot on your own, optimize your bidding strategies, and keep you focused on the vehicles that actually drive profitability in your operation.
As Knox summarized at the end of the conversation: "It's going to be a challenging year for acquisitions. We know that. Margins are going to compress. Right now, it is ultra-critical for everyone in your organization that is putting a hand on a car to buy a car—they need to be using data and discipline when making their decisions."
Data and discipline aren't just buzzwords. They're the difference between dealerships that thrive in tight markets and those that struggle to keep their lots stocked with profitable inventory.
Sales opportunities in 2026 look strong. But when sales are strong, acquisition becomes that much tougher. The dealers who win will be the ones who approach acquisition as a disciplined, data-driven process rather than a gut-feel game.
Start with your historical sales data. Understand your cost structure. Know your recon capacity. Focus on scarcity as much as market day supply. Follow the CARS framework. Win more appraisals. And most importantly, maintain discipline even when the market gets heated.
Because at the end of the day, a $25,000 car is worth $25,000—and the dealer who understands that best will be the one who wins the acquisition battle.
About LotTalk Podcast: LotTalk is powered by LotPop and hosted by Chris Keene, John Anderson, and Renaldo Leonard. The podcast brings actionable insights, industry trends, and expert analysis to automotive professionals. Listen on YouTube, Spotify, Apple Podcasts, or visit lottalkpodcast.com.