Used car margins are getting squeezed in 2026, but Chris Keene and Renaldo Leonard argue most of that “margin compression” is self‑inflicted, not purely a market problem. In this Season 3 kickoff of LotTalk, they challenge used car managers to stop digging the hole deeper and get back to fundamentals: velocity, disciplined inventory management, and real partnership with fixed ops.
Margin Compression: The Self‑Inflicted Wound
Margin compression has been the buzzword since Dale Pollack popularized it, but the hosts push back on the habit of blaming “the market” for every gross problem. They argue that dealers created their own economy by getting fat and happy during the boom years and letting disciplines slide in acquisition, pricing, merchandising, and follow‑up.
Key ideas:
- Transparency and consumer information have permanently squeezed margins, so every leak matters.
- Many dealers are “dying of a thousand razor cuts” and only now waking up in the ER, with band‑aids everywhere and no idea where the bleeding started.
- Margin compression is often a self‑inflicted result of poor process, ego, and ignoring basic blocking and tackling.
A line worth repeating in your next managers’ meeting: “Dealers create their own economy.”
Back to Basics: Velocity and the First 30 Days
The core operational theme of the episode is brutally simple: protect the first 30 days and velocity will protect your gross. Chris and Renaldo repeat what no one in the business really disagrees with: you make the most money and lose the least in the first 30 days of a unit’s life.
Actionable basics the hosts hammer:
- Fill the lot, then drive activity to it.
- Inventory manager’s job: fill parking spots and drive traffic to what’s in them.
- Sales manager’s job: manage the sale, empty those spots, and restart the cycle.
- Manage by activity, not by calendar.
- Stop cutting prices just because a tool says “no change in 7 days.”
- Start with one question: what activity does this VIN have or not have (SRPs, VDPs, and actual leads)?
- Protect the “first 30” window.
- Waiting until day 37 to react turns into 47, then 67, then 90, then a wholesale loss.
- The best operators are making smart decisions in the 10–30 day range and averaging around a 30‑day inventory age while still pushing volume.
You do not need another “magic bullet” tool; you need consistent execution of a simple, disciplined velocity plan.
Activity Over Gut: How to Use SRPs, VDPs, and Leads
One of the most actionable sections of the episode is Chris’ framework for reading digital activity signals. He breaks it down to the old‑school question: is it the money, the machine, or me?
Use this decision logic in your next inventory review:
- Scenario 1: High SRPs & VDPs, no leads.
- The market is telling you the machine is good (they’re searching it) and the money is close (they’re clicking it), but they’re not converting.
- First check merchandising:
- Are photos clean, recent, and seasonally accurate (no green trees in January)?
- Does the car look beat up, dirty, or poorly detailed online?
- Is the description readable, free of typos, and written for a consumer, not a car guy?
- If merchandising is solid and they’re still not raising their hand, then make a proactive price move in the first 5–10 days instead of waiting until it ages.
- Scenario 2: Multiple leads, weak follow‑up, and you still cut price.
- This is pure self‑inflicted margin compression.
- If you have 3–4 opportunities on a vehicle at 45,000 dollars and nobody has been called, texted, or emailed with quality follow‑up in three days, cutting price is the wrong lever.
- The problem is not the market or the money; it is me (process and people).
Renaldo’s advice: take off the fat, ego‑driven car guy hat and evaluate your listings like a consumer would. You buy online too—if your own VDP wouldn’t convince you, fix it before blaming the market.
CarMax, Buckets, and the Danger of Believing Your Own Press
The hosts use CarMax’s 2025 struggles as a cautionary tale for big and small operators alike. Early data scientists were signaling a storm coming, but leadership didn’t react until it translated into real pain and leadership changes.
The lesson for used car managers:
- Velocity and bucket management are not advanced strategies; they’re fundamentals.
- Buckets, pricing cadence, and age discipline should be baked into daily process, not activated only when social posts say “the market spoke.”
- Ignoring your bucket strategy while you “load up” inventory for spring will quietly kill your SRPs, VDPs, and total sell‑through.
- More inventory does not automatically equal more at‑bats.
- Chris shares a dealer who grew from 76 to over 100 pre‑owned units, yet search results and VDPs dropped while sell‑through fell from the 50–60% range to the high teens.
- The root cause: they drifted from pricing discipline and bucket management while adding units.
Contrast that with a dealer who consistently keeps pricing at or slightly above market, makes decisions based on activity, and preserves a 30‑day average age. Same market conditions, very different outcomes—proof that process, not just market, drives results.
Fixed Ops: Your First 30 Days Start in the Shop
The episode finishes on an area many used car managers under‑estimate: fixed operations as the gatekeeper of your first 30 days. If your recon and detail pipeline is broken, your “first 30” is half gone before the unit ever hits your website.
Key fixed ops realities from the show:
- You may have created your own recon bottleneck.
- Dealers brag about “loading up” for spring, but never ask if they have enough bays, techs, detail capacity, or process discipline to handle the influx.
- One group Chris mentions is running 15.8 days just to get vehicles in front of consumers—if 15 days is the new 30, they’re already behind before day one online.
- You can’t enforce aging policies if service can’t support them.
- Leadership cannot hammer the used car manager over 60‑day inventory if fixed ops is under‑resourced or misaligned.
- Managers must decide whether they have a “KNOW problem” (do they understand that used cars are the service department’s number one customer?) or a “NO problem” (they know, but they won’t act).
- Align on hard expectations.
- Set clear targets such as: “Every new used unit is through the shop, detailed, and online in under 48 hours.”
- When obstacles surface, the only acceptable response is to get it done—or replace the people who can’t or won’t.
Renaldo sums up the culture requirement in three letters: GSD—Get Shit Done. Every role is replaceable; the people who stay will be the ones who execute the basics relentlessly.
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.