NEW YORK -

It’s not yet clear how extensively financing legislation in recent years will end up impacting the used-car dealer industry, but market research from IBISWorld suggests that during the next five years, used dealers will find some promise in the lease-here, pay-here market.

Additionally, there could be more good news in store for the overall used-car market: the firm expects 41.5 million used sales in 2014, which would represent 1.5-percent year-over-year growth.

These findings were all part of an announcement from IBISWorld on Tuesday saying that it had updated its market research report on used-car dealers in the U.S.

“Like most automotive industries, the used-car dealers industry felt the impact of the recession and the dramatic slowdown in consumer spending; however, over the five years to 2019, adoption of ‘lease here, buy here’ financing options will help used-car dealers stay competitive and increase profitability, even though the effects of new legislation on financing practices will remain uncertain,” the firm said.

“For these reasons, industry research firm IBISWorld has updated a report on the used-car dealers industry in its growing industry report collection,” it added.

Industry revenue for used-car dealers in 2014 is expected to be north of $101 billion, representing 3.5-percent annual growth since 2009, according to IBISWorld.

In fact, the growth for this year alone is expected to be at 1.6 percent, the firm said.

And with shorter supply, prices climb and help profit margins, the firm said.

IBISWorld Industry Analyst Brandon Ruiz said:  “Used car dealers benefited from offering independent financing solutions during the downturn.”

That, of course, includes the buy-here, pay-here financing. Typically, BHPH customers would fall into the C- and D-grade credit brackets, the firm explained.

But sparse credit availability made it difficult for even B-grade customers to secure affordable lending, IBISWorld said, driving some of these shoppers to the BHPH offerings of used-car dealers instead of traditional financing from new-car dealers.

“The recession greatly reduced consumers' ability to purchase vehicles,” said Ruiz.

Many customers saw their incomes and savings fall due to unemployment and asset price decline, and IBISWorld suggests that consumers with poor credit grades “have been among the worst hit” — and they make a good chunk of the industry.

IBISWorld points out that there was a 51.7-percent drop in the amount of money spent by D-grade credit customers at used-car dealerships between 2008 and 2009.

But the firm added this silver lining: “Fortunately, relative economic stability is encouraging spending on used cars.”

Hence, the aforementioned example of 41.5 million used sales in 2014.

“The US economy will begin growing strongly again in 2014, and because car sales typically move with the business cycle, car sales are expected to follow suit,” the firm noted.

For more information, visit www.ibisworld.com.

Joe Overby can be reached at joverby@autoremarketing.com. Continue the conversation with Auto Remarketing on both LinkedIn and Twitter.