MEDFORD, Ore. -

The third quarter was strong for Lithia Motors in its used-car operations, but the dealer group has its sights set higher — and management says there’s some work left to do.

The retailer has raised its monthly used-vehicle sales goal by 25 percent, and during Wednesday’s quarterly conference call, president and chief executive officer Bryan DeBoer underlined the need for Lithia dealers to take full advantage of “mining”  what the group calls its five channels for sourcing used cars.

Previously, DeBoer explained in the call, the retailer was aiming to sell 60 used units per store each month. But given its success in this area, it has pushed that target to 75.

“The key to our success in accomplishing this objective is to grow our core vehicle offerings. These three- to seven-year-old cars are most difficult to source, and our stores must effectively mine the five channels for procuring this inventory,” DeBoer said. “These channels are customer trade-ins, auctions, wholesalers, private parties and other dealers.

“As we have more success in selling core vehicles, we will turn to generate more inventory in our value auto category through the trade-ins received on these sales,” he added. “Success in core vehicles drives our performance in the rest of our used-car offerings.”

Lithia breaks its used-car operations into the following categories: certified pre-owned (two years old or less), core product (three- to seven-year-old vehicles) and value auto (eight years or older; 80,000 miles).  

Overall, Lithia’s same-store retail used sales climbed 24 percent, as the retailer moved about 12,900 units. The resulting used-to-new ratio was 0.9:1, DeBoer said.

The per-store average was 52 used sales each month, he added, compared to 40 sales per month per store last year.

Interestingly enough, an analyst asked during the question-and-answer portion of Wednesday’s call if — and how long — Lithia would continue to outperform the market. Answering the analyst, DeBoer suggested Lithia doesn’t actually outperform the market and, rather, has a lot of room for growth.

“This is obviously our focus as an entire organization, and it will remain such,” DeBoer said of used cars. “I will say this: we don’t believe that we do outperform the market. Even though we’re 0.9:1 used-to-new ratio, I don’t know that’s a great indication of what our potentials are.

“What we look at is each of our individual markets; we are the dominant manufacturer within those markets,” he added, noting the advantage Lithia tends to have with frontage and “prime locations” throughout the majority of its markets.

Lithia benefits from “exposure in those markets” and the acreage of its dealerships, DeBoer added, noting that “we have probably have three acres per site that we can put used cars on.”

In some cases, Lithia is able to fit 250 units within those lots, and some of its stores in small- to medium markets are moving upwards of 150 or more used cars each month.

“So we believe it’s really just a matter of procurement, and that’s why we focus so soundly on that middle three- to eight-year-old core product and really what we call mining those vehicles,” DeBoer said. “And I would say this: we’re probably getting a ‘C’ at that.

“We have plenty of stores that are ‘A’ producers, there’s no question. But we have plenty that are probably ‘D’s’ as well and don’t understand what it means to open up each of those channels and find two or three cars a month that can increase your sales five, 10 percent in each of those five categories,” he continued.

DeBoer mentioned that prior to Lithia’s expansion, its original stores in Medford, Ore., were moving between 80 and 90 used units a month on average, “and mine was a 3-to-1 used-to-new store.”

“So there’s lots of potential in these small- to midsize markets and we’re expanding into value auto, core and certified, and we believe that there’s still lots of opportunity,” he added.