Bill Nash: Yes. Thanks for the question, John. Yes, the within inventory now. Keep in mind, what we sold through the quarter it’s more than 50% of that was bought prior to the quarter. So what’s in inventory now is stuff that was bought during the quarter, which talked about, there’s been some steep depreciation during the quarter, and we’re continuing to see depreciation. So that should bring prices down. Keep in mind, though, just to kind of ground everyone in any given year, you need about — just during the year, you need about $1,500 of depreciation, just to keep your sales prices flat, and that’s just because as new cars come out, they’re more expensive. So you really don’t get much benefit until after you get over $1,500 on an annual basis. So I do — we do feel while we don’t disclose what we think the average price is, it is our inventory — saleable inventory at this point is cheaper than what was sold in the quarter.
John Murphy: That’s very helpful. And then just one follow-up on the market share, I mean, obviously, that’s an output of what’s going on in the market and your actions and competitive forces. I mean how do you think about what’s going on in the competitive landscape? Because I mean if you think about a company like an automation at about 1.3 million used vehicles last year. Or on an LTM basis, they just stepped up their buying outside of their dealerships and they did about 100,000 units outside their dealerships from say had been doing before. So, it just seems like that the franchise side, and that’s one unique example, but are going after some of the same vehicles that you are even outside the traditional channels. Are you seeing that as you’re going out there and acquiring or is that just — is that kind of a one-off?
Bill Nash: You mean as far as the acquisition of vehicles?
John Murphy: Well, I mean, the franchise dealers traditionally would take flow from the new vehicle, the trade-ins and other sources. But they’ve stepped outside of that traditional channel are going out to third parties or not in auctions, but direct-to-consumer as well, and that was an incremental source of 100,000 units for them on an LTM basis, and that’s just new, right? That’s just incremental and new activity. So, I’m just curious, if that’s unique to them or you’re seeing that sort of more in general?
Bill Nash: Yes. No, I think — look, you’re very aware of just kind of the volume that’s out there in auctions, especially zero- to four-year-old vehicles. And if folks are looking for that inventory, they got to be a little bit more creative. So, it doesn’t surprise me that other folks are doing that. Our zero to four sales actually year-over-year went up a little bit. So, I would — I mean that’s one data point that you have. I think all the dealers are just trying to get vehicles from wherever they can. And that’s why I’m excited about some of the product innovation when it comes to things like Max offer. When we talk about sales efficiency, that’s just from the consumers we don’t add in there, what we’re getting from other dealers.
And that product skews more retail than it does wholesale. So, it doesn’t surprise me that you have an example of that. I think folks that can do things like that, they’re going to try to do that. And then, there’s a lot of competitors. Let me keep in mind, there’s tens of thousands of competitors that sell zero to 10-year-old cars. Some of them don’t have that ability.
Operator: We’ll take our final question from David Whiston with Morningstar.
David Whiston: Just wanted to ask about advertising expense, which did go up year-over-year, whereas for the nine months, it’s down what was the catalyst to make you increase spending this quarter is what I’m curious about.
Enrique Mayor-Mora: Yes, that’s going to be very much a function just of our CapEx spend and the depreciation there. But then also when it comes to our technology spend, portion of our technology spend is going to be depreciated, right? And so, you’ll see that impact in our D&A.
Bill Nash: Yes. I think on the advertising piece. Look, we’re in this for the long haul. And so, we’re going to spend money on brand, we’re going to spend money on acquisition. Keep in mind, and we’re trying to think about in the new year, how to talk about advertising. When we talk about advertising, keep in mind, that’s advertising for sales, that’s advertising for buy, that’s advertising on Edmond. So all along, we’ve said, hey, we’re going to spend more in the back half of the year, but it’s going to be similar on a full year basis. And so we’re actually executing it. Now I don’t want you to think that we’re just like going in advertising. We’re absolutely measuring the ROI. But what you got to realize is sometimes if the ROIs not go on sales, you may shift some to buys or you may shift some to Edmond.
