Employee discount spiffs have not only given new-car sales a jolt, they've perked up profitable sales of used vehicles, too.
Big 3 dealerships are taking in a flood of vehicles as trade-ins and are paying less for them. Buyers are finding used-vehicle bargains.
Some retailers complain that employee pricing incentives on new vehicles leave them with too little profit margin. But the extra used-vehicle sales are gravy.
To be sure, used wholesale prices are down as a result of incentives that ignited sales of new General Motors, Ford Motor Co. and Chrysler group models. But dealers who buy used inventory at "sensible" prices are doing fine, says Paul Taylor, chief economist at the National Automobile Dealers Association.
Tim Walters, a Chevrolet dealer in Elkland, Pa., says the GM employee discount program has sparked used-vehicle sales by pulling customers into his dealership.
In early July, he says a used 2005 Chevrolet TrailBlazer with fewer than 10,000 miles on its odometer and an original sticker price of around $32,000 could be purchased at wholesale for about $17,500.
"That presents a great opportunity," Walters says. "A customer comes in for the new TrailBlazer, and, granted, you can buy it for $25,000 with all of the dough and discounts, but it's still a little bit out of their budget. Well, I've got this real nice one with less than 10,000 miles for $19,995. That is perfect."