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Used Department 'Increasingly Important' for Dealers

  • May 01, 2014
  • Auto Remarketing

In one particular piece of The Blue Sky Report from Haig Partners, the firm emphasizes the often strong profitability of a dealer's pre-owned operation, while also illustrating the importance of that department with this key statistic: 

The share of total retail unit sales for franchised dealers that used vehicles accounted for in 2013 was more than 7 percentage points higher in 2013 than it was in 2007, according to the report. 

And there were 152,342 more used unit retail sales in 2013 for public retailers than there were in 2007, the report indicated, citing filings with the SEC. 

"More dealers are focused on their used-vehicle business because of the sometimes stronger profits for used cars, and the reconditioning that also boosts fixed operations," the report notes. 

"And F&I on used cars can be higher than with new-car sales," it continued. "Dealers are doing a better job gaining trade-ins and many have accepted the tenets of the vAuto approach, where rather than hoping for above market grosses, they sell the car for market value and try to increase the number of unit sales per month for a given amount of working capital to maximize profits. 

This was just part of the multitude of data included in The Blue Sky Report, which reviews the dealership buy-sell market in addition to several data sets examining dealer values, auto industry profits and more. 

For instance, the report notes that dealership buy-sell transactions rose by double-digit rates in 2013, and analysts are predicting this year's rates will continue to rise. What's more, it shows that in 2013, public retailers committed more than $1 billion to acquisitions for the first time since 2006.

 

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