The used-car business is hot, prompting franchised new-car dealers across the nation to pay more attention than ever to their used-vehicle operations, in some cases opening used-only stores.
Fueling the newfound focus on used:
- The market is huge and largely untapped by franchised new-car dealers.
- Used-vehicle sales are more profitable than new-vehicle sales on average, and the gap is widening.
- Dealers are tapping sophisticated digital tools to enhance their used-vehicle profits.
With new-car margins collapsing, in part because shoppers know more about prices because of the Internet, "we really need robust, high-performing used-car sales in our stores," says George Athan, vice president of sales at DCH Auto Group of South Amboy, N.J. "It generates service and parts business and repeat customers. It's a critical, critical part of our business strategy."
The Manheim 2014 Used Car Market Report, citing CNW Marketing Research, says U.S. franchised new-vehicle dealers sold 15.6 million used vehicles in 2013, about the same as their new-vehicle sales. But industrywide, used-vehicle sales totaled almost 42 million last year, including sales by independent used-car dealers and individuals.