EXCLUSIVE PREVIEW: How Franchised Dealers Can Push Used Retail Operations to Success in 2013
As Jack Anderson puts it, a dealer today can’t just be good at one thing. With slimmer profit margins throughout the dealership, each department has to be humming along for the store to find success.
“The margins in an automobile dealership in any area have lessened over the years,” said Anderson, the used-vehicle director at West-Herr Automotive Group in the Buffalo, N.Y. area. “You’ve got to be running on all eight cylinders.”
And that means each area of the dealership, including the used-car department.
“It’s extremely importantce to us as a group,” Mike Barone, wholesale director at California’s Rusnak Automotive Group, said of used retail sales. “Like any dealership, it helps your service and parts and your sales bottom line.”
Likewise, when asked what he believes the used-car department contributes to the store as a whole, Eric Davis — the used-car manager at Cole Chevrolet — said it fosters “stability in every department (of) the store.”
But despite benefits of the used-car department to franchised dealers and the overall strength of the used market during 2012 — as well as expectations for a healthy used market in 2013 — dealers are not without challenges on this side of the business.
For many dealers — franchised or independent — supply has arguably been the biggest hurdle in the used market, and the shortage could still be the thorn in dealers’ sides this year.
“While the used-car sales rate in 2013 is going to be higher than (2012), it is not going to see a significant increase,” said TrueCar.com senior analyst Jesse Toprak late last year. “The reason for that is there is still going to be a supply constraint that has been experienced for the past three years and will still be a factor (in 2013).
“So, we are probably going to see single-digit increases in used-car sales compared to (2012), but there simply won’t be enough cars available to see a double-digit increase,” he added.
Overall, CNW said in its Retail Automotive Summary from November that it expects more than 40 million used units will be sold in 2013, with sales figures expected to reach 40.25 million vehicles in 2014.
That said, firm president Art Spinella does expect private-party sales to gain a greater share of the market in the next two years, “with franchised dealers losing ground and independents remaining flat.”
That said, based on the dealers Auto Remarketing spoke with in late 2012, it appears franchised shops are fairly optimistic on how their used sales will play out in 2013.
Greg Johnson, the new- and used-vehicle director for the Larry H. Miller Group, is expecting a 10- to 12-percent increase in used retail sales for his retailer’s dealerships scattered throughout the Western U.S.
For Gene Detrick and his dealers in the Earnhardt Auto Center group, the gain is expected to be even higher.
“In 2012, we’ve had over a 20-percent store-to-store volume increase, and it’s reasonable to expect a comparable increase in 2013, if not more,” said Detrick, the corporate used-vehicle director for the Arizona-based group.
Back East at West-Herr, Anderson is expecting a year similar to 2012, with a slight gain in sales, saying he anticipates a “great used-car year.”