Shifting market conditions are starting to pressure auto retailers' used-vehicle business plans and profits.
Inflation and higher interest rates are prompting many consumers to seek lower-priced used vehicles. And getting more of those vehicles to stock dealership lots is proving a challenge. Those are some key factors that have led to a softer-than-expected first half in the used-vehicle business for both traditional dealership groups and the industry's upstart online used-only retailers.
Public retailers notably saw per-vehicle profits on used cars tumble sharply this spring, and some pulled back on growth goals for their used-only ventures. Online used-only retailers have scrambled this year to slash costs because consumers' vehicle-buying activity didn't match last year's frenzied levels, leading to plunging per-vehicle profits and deeper net losses across the board. Private dealers, too, are wary of the squeeze. Though several noted the used business remains robust, they are monitoring the market closely to see whether demand fluctuates more.