DULUTH, Ga. -

As the retailer continues to move forward with Phase II of its 121 Program, Asbury Automotive Group said it’s quite clear the program has helped lift the company’s used-car operations.

Just look at the dealer group’s used-to-new sales ratio today in comparison to where it stood five or six years ago. The program’s imprint certainly can be found there, said executive vice president and chief operating officer Michael Kearney.

During Wednesday’s quarterly conference call, Kearney touched on the 121 Program as well as the benefits of stronger used supply.

“Our used-to-new sales ratio was 81 percent for the quarter, as our markets continue to react favorably to the increased availability of pre-owned product,” Kearney said.  “The impact of the Asbury 121 Program on our used-vehicle performance is evident when you compare our used-to-new sales ratio of 81 percent today versus the 60 percent range we produced back in 2007 and 2008 time frames.

“We believe the supply of pre-owned vehicles will continue to improve throughout 2013 as we move further away from the collapse of new-vehicle sales in the 2009 and 2010 time period, and the increase in leasing in late 2010,” he added. “We also are seeing more supply from the daily rental companies as they refresh their fleets.”

Overall, the company moved 16,343 used retail units for the first quarter, up from 14,794 used sales in Q1 2012.

Used-vehicle retail revenue climbed from $273.4 million to $318.5 million. Used retail gross profits climbed from $27.4 million to $30.5 million.

On a same-store basis, used retail gross margins fell from 10 percent a year ago to 9.5 percent in the most recent quarter, while gross profit per used vehicle was relatively static and came in at $1,847.

However, margins and gross profit per vehicle were up from Q4 2012, thanks to more trade-ins, Kearney said.

Phase II of 121 Program

During the Q&A portion of Wednesday’s call, Kearney also explained some of the differences between the two phases of the 121 Program. As previously reported in Auto Remarketing, the goal of the program is a one-to-one used-to-new sales ratio.

Phase I was started a few years ago, Kearney said, and was “essentially a process at the store level on teaching individuals how to value cars … as well as educating sales staff and management.”  Following its implementation, it has been utilized for more than 18 months now, he said.

“Phase II is essentially inventory movement. It is a process whereby all of our inventory is consolidated daily. We evaluate inventory; we have a team of individuals that work with individual store management and evaluate, based on the age of a vehicle, where that vehicle should be moved, whether it should go to another store, at what price it should go that go to that store, and then eventually, should that vehicle be sent to auction.

“We started that program late last year; it obviously will move much faster, we will be finished with the entire country on that program sometime before the end of the second quarter,” Kearney added.
 

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