Recession's lessons boost used-car sales
Mike Cimino, vice president of Phil Long Dealerships in Colorado Springs, Colo., says his group has made a lot of changes in the way it runs its used-vehicle department in recent years.
In 2009 the group started trading used vehicles among its 19 dealerships and soon reduced the average used-vehicle inventory turn from 60 days to 30 days. The group also began sending to auction any used car or used truck that did not sell after 60 days on the lot.
Those practices, born during the recession and nurtured over the years, helped the Phil Long group increase sales of used cars and trucks by 11 percent in 2013, to 8,529. Through mid-March, 2014 used-vehicle sales were up about 30 percent, to around 1,200.
"During the recession you only had so much cash and you managed your assets better," Cimino says. "We found when we did that the cars were fresher, inventory had more sizzle, and managers were more accountable. Everybody became smarter in this business."
New-vehicle sales took center stage last year, but used-vehicle sales are still a big deal at the biggest public and private dealership groups. That fact is documented in Automotive News' latest list of the top 125 dealership groups in the United States based on 2013 new-vehicle sales.
Of the groups on the list, only 17 reported that they sold fewer used vehicles in 2013 than in 2012, and 66 increased used-vehicle sales by 10 percent or more.
Phil Long ranked No. 118 in new-vehicle sales and No. 66 in used-vehicle sales.
|The top 5 sellers of used vehicles in 2013|
|Dealership group||'13 used-vehicle sales||change vs. '12|
|3. Penske Automotive Group**||166,419||15%|
|4. Sonic Automotive||107,054||1%|
|5. Group 1 Automotive**||98,813||16%|
|*CarMax Inc. fiscal year, March 1, 2012, through Feb. 28, 2013|
|**Includes sales outside the United States|
|Source: Automotive News Data Center|
Steve Germain, CEO of Germain Motor Co. in Columbus, Ohio, says retaining best practices developed during the recession helped his group increase used-vehicle sales last year by 16 percent, to 8,853.
For example, during the recession Germain adopted a used-vehicle inventory management tool that helps determine what vehicles to stock and how to price them.
He says an efficient used-vehicle operation helps new-vehicle customers get more for trade-ins. That, in turn, helped increase sales of new vehicles last year by 24 percent, to 10,839. The group ranks No. 36 in used-vehicle sales and No. 83 in new-vehicle sales.
Germain says 75 to 80 percent of his new-vehicle customers have a trade-in.
"In the old days you were a new-car dealer and you just focused on selling new cars," he says. "The recession in '08 and '09 made everybody a little bit smarter when it came to maximizing opportunities in fixed operations and used cars."
CarMax has been the No. 1 retailer of used vehicles in the Automotive News survey since 2005. CarMax's used-vehicle sales in its fiscal year increased 10 percent to 447,728.
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