In these days of new-vehicle margin compression, a successful used-vehicle department is critical to a dealership's financial results. The ratio of used- to new-vehicle retail sales is a closely watched metric of dealership success.
A 1-1 ratio is good, and a 1.25-1 ratio is great, Les Abrams, Cox Automotive's director of training and dealer services, wrote in the company's 2018 Used Car Market Report & Outlook.
"Used retail unit volume equaling or surpassing new retail volume is a foundational correlation of highly successful used-vehicle departments, assuming the dealership is meeting new-vehicle volume goals," he wrote. "In today's market, a key driving force is the resulting increase in profitability, which releases some pressure on the new-vehicle department for overall dealership profitability."
But in fact, it's a metric where very few dealerships excel.
Kunes Country Auto Group, of Delavan, Wis., about 50 miles southwest of Milwaukee, topped all groups on Automotive News' list of the top 100 dealership groups based in the U.S. ranked by used-vehicle sales, with a used-to-new retail sales ratio of 1.71-to-1.
Kunes Country was one of nine groups on the top 100 list with a ratio at or above the 1.25-to-1 level that Abrams called "great." And just 18 posted a used-to-new sales ratio of 1-to-1 or better. Almost the same number, 17, posted a ratio of 0.55-to-1 or below. (The metric was not applicable to CarMax Inc., which has no new-vehicle sales.)