Dealers find it tough to stock used cars
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“If you do find them, the prices are so high you can’t buy them, resell them and make a profit,” says Baer of many of the used vehicles available today.
“Lots of dents and scratches; they need too much work. We’re in Pennsylvania where we have a pretty strict state inspection law. By the time you do what you need to do to resell them, customers don’t want to pay for them.”
Baer is among the dealers at the NADA convention who say the used-car shortage makes it difficult and expensive to stock their used-car lots.
Joe Sparacino, general manager of Audi Pembroke Pines in Pembroke Pines, Fla., says finding enough late-model Audis for his certified used-vehicle program at reasonable prices is particularly difficult right now. He says the family-owned business was awarded the franchise in summer 2009 and just completed construction of its dealership last summer. At less than 2 years old, the dealership has virtually no vehicles coming back off lease, he says.
So most of the used Audis he buys are through auction sales open only to Audi dealers. But that means he’s “bidding against all the Audi dealers in the United States,” he says.
Not using auctions
Not every dealer is having a hard time stocking their used-car lots, though.
Vernon Brinson, CEO of Royal Automotive, a New Orleans Honda dealership, says he buys used Hondas when his customers turn in their off-lease vehicles at his store and he buys additional ones from Honda at its Honda-dealer only online auction. He says he doesn’t buy vehicles from physical auctions.
Brinson says that about 60 percent of his repeat customers don’t trade in their older Hondas. They keep the vehicle as a second or third vehicle or pass it to a family member.
“Hondas never wear out,” says Brinson, who was once an Oldsmobile dealer. “We don’t have the trade-in volume the typical domestic dealer would have.”
Michelle Primm, managing partner at Cascade Auto Group Ltd. (Audi, Mazda, Porsche, Subaru) in Cuyahoga Falls, Ohio, says she finds the right used vehicles for her dealership by buying off-lease vehicles from the factories of the various brands she sells.
She says the prices aren’t always reasonable but “most of the time they’re OK.”
Tom Roddy, president of Benson Motors Corp. (Chevrolet, Mercedes-Benz, Honda, Smart) in San Antonio, says it’s not impossible to find good, reasonably priced vehicles, but it’s certainly more difficult than it used to be.
He adds: “The prices are more than we would expect to pay, and it doesn’t seem to be lightening up any.”
You can reach Arlena Sawyers at asawyers@crain.com.
