Megadealer Lithia Motors has stepped up its already active used-car operations, Chairman Sid DeBoer says.

“We are really heavy in the used-car business and expanding every piece of that at every store,” he tells WardsAuto.

The pre-owned vehicle market has been hot over the past few years.Total used-vehicle sales of 38.8 million units in 2011 were the strongest in four years. Limited supplies and stable demand has kept pre-owned prices high, averaging about $14,500.

Publicly owned Lithia, a perennial top player on the WardsAuto Megadealer 100, sold 58,398 used cars in 2011, nearly 10,000 more than the year before. Lithia sold 45,492 new cars last year.

The Medford, OR-based chain operated 85 stores in midsize markets throughout the West and Midwest. It earned $2.76 billion in revenues last year, $709.5 million of that from pre-owned sales. 

With used-car supply tight, Lithia has expanded its store inventories to include vehicles with higher mileage and more years. 

“We are selling even the older, as-is vehicles that we used to wholesale to other dealers,” DeBoer says.

Nearly 39 million used cars were sold in the U.S. last year. Of that, franchised dealers sold slightly more than 13.8 million units, an 8% increase, according to the latest Manheim Used-Car Report.

Independent used-car dealers sold slightly less than 13.8 million units last year, a 5.6% increase. Private-party sales rose 1% to 11.2 million.

Franchised dealers’ strong showing in the pre-owned market stems from their paying more attention to that area of business in recent years, says Jonathan Banks, an auto analyst for the National Automobile Dealers Assn.

“Dealers have retooled their used-car operations, putting some of their best people there and using inventory-management technology to make it work more efficiently,” he tells WardsAuto.