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Used-Car Operations ‘All Important,’ NADA Officer Says

“A lot of big dealers are concentrating on used, not new,” says Stephen Wade, vice chairman of the National Automobile Dealers Assn.

LAS VEGAS – Until new-car sales pick up, dealers will continue to look to their used-vehicle operations to make up for lost ground in new-car departments, says Stephen Wade, vice chairman of the National Automobile Dealers Assn.

“Until new-vehicle sales reach 12 million again, used will be a most important operation to dealers,” he says.

“A lot of big dealers are concentrating on used, not new,” Wade tells Ward’s at the 2010 F&I Conference and Expo here. “Right now, used is all important.”

Ward’s forecasts new-vehicle sales this year at 11.2 million to 11.5 million and reaching 13.1 million next year, depending on sufficient improvement in the economy.

Dealers, who saw new-car deliveries fall from 16.1 million in 2007 to 13.2 million in 2008 to a frightening 10.4 million in 2009, turned to selling used cars as a survival tactic.

“It was about staying in business,” says Wade, a multi-franchise dealer based in St. George, UT.

Last year, 35.5 million used cars were sold, about 15 million of them by franchised dealers.

Because of demand, used-car operations this year are seeing higher profits, stronger prices and more frequent inventory turns, says Tom Webb, chief economist for Manheim Consulting, a unit of Manheim, an auto auction firm.

“Business went up and used-car values increased 15% to 20%,” Wade says. He questions how long pre-owned values will go up like that. “I’m wondering when the air will come out of those tires.”

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TAGS: Dealers Retail
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