CARY, N.C. -

Admittedly, Asbury Automotive Group didn’t start 2019 as strong as it would have liked on the used-car side.

But it was a different story in the fourth quarter, with same-store used-vehicle sales climbing 10% year-over-year. The big driver?

Certified pre-owned, where sales jumped 16% year-over-year in Q4, president and chief executive officer David Hult said in the retailer’s latest quarterly earnings call.

“The first half of the year we underperformed in pre-owned and weren’t as focused on it as we should have been. And we’ve really been more focused on it in the fourth quarter,” Hult said. “There’s a lot to selling more vehicles. Inventory aging, wholesale losses, reconditioning dollars, finance dollars — there’s a lot to think about when doing it. So that growth, what we’re most proud about, really came through CPO vehicles.

“We’re not out buying a lot of cars, we’re keeping a lot of cars internally, getting a lot from our OEM partners. Our CPO sales in the quarter, alone, on a same-store basis were up 16%,” Hult said. “We’re up 10% overall but 16% on CPO, so we see CPO as a really valuable option for our guests and something that we’re going to continue to take advantage of.

“And we also think it’s a differentiator between us and the independents that can’t offer these same CPO products.”

Digging further into Asbury’s same-store Q4 results, used-vehicle retail revenue was up 10% year-over-year at $465.5 million. Same-store used retail gross profit was up 1% at $29.3 million.

Asbury retailed 20,905 used vehicles in the fourth quarter, up 10% on a same-store basis.

Gross margins on used retail were 6.3% (down from 6.9%), with a gross profit per unit of $1,402.

The latter is down from $1,522 in Q4 2018.

 “Though our gross profit per unit was down, it is important to remember that used-car volume growth also drives increases in reconditioning, parts and service gross profit, as well as F&I business,” senior vice president of operations Dan Clara said during the call. “On average, we generate approximately $4,000 of gross profit when a used vehicle is sold. This includes the used-vehicle gross profit per unit, the F&I per vehicle and reconditioning gross profit per used vehicle.”

One part of Asbury’s pre-owned strategy has been to acquire more vehicles from the consumer. Going out and purchasing used inventory can ultimately pinch margins, Hult said.

“Your only dip in pre-owed when SAAR comes down is acquiring vehicles. Most dealers get their (used) vehicles from customers trading in their vehicles,” Hult said. “And when you purchase cars, or have to purchase cars for your sole inventory, so to speak, your margins are going to be a lot more compressed.

“We’re very focused on this and really trying to connect more directly with the customers, whether they’re buying or not buying, to acquire their trade-in.”

Moving to full-year results, Asbury’s used retail unit sales were up 4% on a same-store basis, with 83,822 units sold.

Used-vehicle retail revenue of $1.85 billion was up 5% on same-store basis; used retail gross profit was essentially flat at $126 million.

Gross margins on used retail was 6.8% (down from 7.2%), with gross profit per unit down 4% at $1,503.