As new-car demand appears to be leveling off, the largest U.S. dealership groups are seeing used-car sales remain a steady, and hefty, percentage of their total revenues.
That's one of several insights from the Automotive News Data Center, which compiled data from survey information to produce its annual list of the top 100 dealership groups in the U.S., as ranked by used-vehicle retail sales.
Revenue from used-vehicle retail sales totaled $57.79 billion at the 100 largest dealership groups in 2016, up 6.6 percent from $54.23 billion at those same groups in 2015 and good for about 27 percent of the groups' total revenue. It is the third consecutive year that used sales have accounted for more than a quarter of revenue at the largest groups.
In total, the top 100 dealership groups sold 2.84 million used retail units in 2016, a gain of 6.3 percent from the 2.67 million units sold in 2015.
The gains in used-vehicle sales at the largest dealership groups mirror larger market trends. Used-car demand and sales have risen in recent years as high-quality, off-lease vehicles return to market, offering consumers a cheaper alternative to increasingly costly new cars.
The glut of off-lease vehicles, the result of a surge in leasing this decade, has pushed used-car pricing down following years of strength, by some measures faster than most predicted. For instance, the seasonally adjusted NADA used-car pricing index was down 8 percent in February from a year earlier.
While that could cause some headaches for lenders, automakers and new-car dealers, demand for used vehicles is unlikely to slow. After seven consecutive years of growth, used-car retail sales are set to rise again in 2017, according to the 2017 Manheim Used Car Market Report. Dealerships that speed up used-vehicle inventory returns and reduce selling expenses could continue to benefit even as margins slip, Manheim says in the report.