After completing the first investigation, this analysis dug deeper to determine if used car prices varied across the United States. Hovering over the map reveals that the west/east coast has higher average used automobile pricing in more populated areas. Some dealers might assume that average car prices are lower in the midwest, so they might decide to buy cars from the midwest and ship them to the west/east coast for sale. This is probably based on the assumption that midwest regions are less populated so demands are lower. However, it turned out that major cities, for example, Louisville in Kentucky has an average used car price of $14,354, which is even slightly higher than the used car price in the SF bay area ($13,781). In contrast, Mendocino county, which is only 155 miles away from the SF bay area, has an astonishingly low average used car price of $5,077. This is due to the fact that local purchasing power, which predominates in this market, has a significant impact on used automobile pricing (Wells, 2016). People who makes more income tend to be less sensitive to the prices of used cars and thus the average prices in that region could be higher even if the region is within the typical Midwest where people wrongly think everyone is poor. In addtion to income, there are more people in metropolitan areas, which increases the demand. As a result, it is a seller's market and buyers have less negotiation leverage when buying cars in these places. Thus, a better option for dealers to increase their profits may be to buy cars from cities with lower average income that are located several hundred miles away from larger cities and then sell the cars in the cities. In this way, dealers can add markup and price the cars higher because of inelastic demand, great purchasing power, and high population density in the prosperous community. Meanwhile, the shipping cost is lowered because of inner-state transportation.
In addition to inspecting average used car prices for each region, it is important to look into whether there is a preference for brands in different regions. Although the top 5 brands in the United States have been identified through preliminary analysis, investigating brand preferences in a particular location may provide dealers with a more precise roadmap and aid them in choosing the brand of used vehicles they should buy. We have reached the conclusion that Toyota is the most popular brand in the used automobile market in most urban areas, including the San Francisco Bay Area, Seattle, and Los Angeles. Ford or Chevrolet are preferred in less populous areas, such as Yuba City in California, Bellingham in Washington, and Santa Maria in California. Studies have revealed the factors that may help explain the formation of this trend. The primary reason is that gas prices are higher in urban areas because of clean energy regulations and fewer refineries close by (Greg et al., 2022), and thus cars with better fuel efficiency such as Toyota are much favored. In comparison, in suburban areas, gas is cheaper and the demand for using a V8-powered American-made truck to move around unpaved roads is higher. Knowing this is helpful for the dealers to price their inventories. Auto dealers might use the tactic to purchase Toyotas from less populated areas at a comparatively lower price, resell them in urban areas within the same state, and charge markups. Since those locations are not too far from cities, transportation costs will not be too expensive.
In this section, we examined information at the regional level, which provides more detailed advice for dealers in various regions regarding the kind of cars they should buy and where they should buy them to increase revenues.