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Average Price to Market

Average Price to Market is a major metric car dealerships use to assess how competitively their used vehicle inventory is priced compared to similar vehicles available in the local or national market. Expressed as a percentage, it compares a dealership's average list price to the average market price for comparable cars, helping guide pricing strategies that balance profitability and sales velocity.

This figure is essential for understanding whether your inventory is priced above, below, or at market value. A well-managed Average Price to Market ensures that vehicles are competitively positioned, reduces time to sell, and improves inventory turn.

Formula to Calculate Average Price to Market

To calculate Average Price to Market, you compare the list price of each vehicle on your lot to the market average for that vehicle, then average those percentages across your whole inventory.

Formula:

Average Price to Market (%) = (Your Vehicle List Price ÷ Market Average Price) × 100

For example:

Your vehicle is listed at $25,000
The average market price for similar vehicles is $24,000
Price to Market = ($25,000 ÷ $24,000) × 100 = 104.2%

If you repeat this calculation across all vehicles in inventory and average the results, you get your dealership’s Average Price to Market.

Importance of Average Price to Market

Understanding your Average Price to Market is critical for setting a pricing strategy that meets your business goals—maximizing profit per unit, turning inventory quickly, or attracting more foot traffic.

Competitive Positioning: Customers shop across multiple platforms and compare prices easily. Pricing vehicles too high can drive prospects away; pricing too low may hurt your margins. This metric keeps your pricing grounded in current market conditions.

Faster Turn Rates: Vehicles priced closer to or below the market average tend to sell faster. Monitoring this percentage helps avoid aged inventory that ties up capital and space.

Profit Optimization: Knowing your market positioning makes it easier to strike a balance between competitive pricing and healthy profit margins.

Real-Time Market Insight: Pricing trends shift rapidly. This metric helps dealerships stay agile and respond to market changes with dynamic pricing.

Practical Example

Let’s say your dealership has five vehicles with the following data:

Vehicle	Your Price	Market Price	Price to Market (%)
A	$23,000	$22,000	104.50%
B	$28,000	$27,500	101.80%
C	$19,500	$20,000	97.50%
D	$25,000	$25,000	100%
E	$32,000	$30,000	106.70%

Average Price to Market = (104.5 + 101.8 + 97.5 + 100 + 106.7) ÷ 5 = 102.1%

This means your inventory is priced about 2.1% above the market on average.

Interpreting the Numbers

Below 98%: You're underpricing your vehicles, which could move inventory quickly but reduce margins.
98%–102%: A sweet spot for competitive pricing; balances speed and profit.
Above 102%: Your vehicles are priced above market; unless there’s a unique value proposition, this may lead to longer turn times.

These ranges can vary by dealership goals, region, and brand reputation, but this is a general benchmark for used vehicle pricing.

Best Practices for Managing Average Price to Market

Use Real-Time Market Data: Resources like vAuto, MarketCheck, or CarGurus pricing insights allow dealers to compare their listings with live competitive data.

Reprice Aged Inventory: As vehicles sit on the lot, their value may drop. Regularly adjusting prices to stay competitive prevents stagnation.

Segment Inventory: Not all vehicles need the same pricing strategy. High-demand, low-supply models may command a premium, while common vehicles should remain close to market.

Monitor Local vs. National Trends: Regional demand can vary. Your Average Price to Market should reflect your local competitive landscape more than broad national trends.

Integrate with Turn Goals: Align your pricing strategies with your desired inventory turn rates. Faster turns might require slightly more aggressive pricing.

Master the art of pricing with ATN’s training focused on optimizing your Average Price to Market. Help your team set competitive prices that drive sales and maximize margins.