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Top 100 Used Car Dealers: Franchised Edition

This installment of Auto Remarketing’s annual Top 100 Used Car Dealers is the first in a two-part series and focuses on franchised dealers.

Included in the June 1 print and digital edition of Auto Remarketing, this is where we highlight some of the strongest used-car selling franchised stores in the country.

The dealer rankings data in this report is courtesy of Dominion Cross-Sell, which collects the information via state departments of motor vehicles.

The Top 100 sales rankings are based on retail used-vehicle unit sales from full-year 2018. Fleet sales were removed where possible.

Please note that while the Cross-Sell data includes a substantial portion of the U.S., it is not meant to be representative of all 50 states.

Again, Cross-Sell gathers the sales data via state DMV title registrations.

Some stores within a multi-point group may title used-vehicle retail sales with their respective state DMV as a group, versus titling individually.

This has been corrected in the data where possible. It is up to the individual state to decipher such collective filings.

Additionally, some of the registration information reported to Cross-Sell may not include city or address information. Given that the sales figures are based on vehicle registrations as reported by state DMVs, sales to customers who register the vehicle out of state are not included in a dealer’s sales total.

Other notes: California sales data only includes the most recent six model years.

**With regards to the Tesla reference at No. 63. The data Cross-Sell received from the state of California designated that address on those sales, which is the Tesla corporate office address. Based on the information provided by the state DMV, Cross-Sell was not able to determine the specific location from which those sales originated. Other specific Tesla sale locations were specified and designated by the state in the full data set; however, those specific locations were not among the 100 highest for sales.

For more information on Cross-Sell data, visit www.cross-sell.com.

Together, the dealers we spotlight in this feature represent some of the strongest in pre-owned performance. Congratulations to all.

The full list can be found here.

Lane action slows with dealers eyeing holiday retail activities

Dealers likely set their sights on retailing used vehicles during Memorial Day weekend rather than being quite as active in securing more inventory from the lanes last week.

The collection of data and observations included in Black Book’s latest Market Insights report offered a variety of evidence to indicate the wholesale landscape is transitioning from spring to summer.

“The spring market uptrend is over, but prices remain stable. The late-model and lower-priced vehicles have the strongest demand,” Black Book executive vice president of operations Anil Goyal said in the latest report.

Reflecting what Goyal noted, editors said their volume-weighted data showed overall car segment values decreased by 0.17% last week. In comparison, car values edged up by 0.02% on average during the prior four-week period.

Within cars, Black Book reported values of high-line vehicles — luxury cars, prestige luxury cars and premium sporty cars — decreased the most, softening by 0.54%, 0.64% and 0.66%, respectively.

Again, looking at volume-weighted data, editors noticed overall truck segment values (including pickups, SUVs, and vans) remained nearly flat, ticking down by just 0.01%. Truck prices have been stable during the past four weeks, edging up by 0.04% on average.

Perhaps frustrating dealers who need them, Black Book pointed out values of full-size pickups increased the most, rising by 0.19%.

Black Book’s anecdotes from the lanes after attending nearly 60 sales nationwide began with an auction owner in Washington.

“The market has slipped a little in the last couple of weeks, but the 30-40K-mile, late-model vehicles are very strong,” the auction owner said.

Editors gathered other recaps primarily west of the Mississippi River, including:

— From Florida: “The buyers were not as motivated today. The rental and lease lanes lacked variety resulting in lower sales percentages.”

— From Pennsylvania: “The market is slower after a strong March/April push. One of the lanes, which had mostly $10,000-range vehicles, sold almost all of them.”

— From Massachusetts: “A mixed bag in the lanes today, but the overall market was flat or slightly down.”

— From Ohio: “Low-sales rate results in a captive finance consignor lane where the floors were being held high.” 

KAR says spring market hit ‘full bloom’ in April

Along with touching on the latest certified pre-owned sales data he could share, KAR Auction Services chief economist Tom Kontos used a gardening analogy to describe how the spring wholesale market reached “full bloom in April.”

According to ADESA Analytical Services’ monthly analysis of wholesale used-vehicle prices by vehicle model class, analysts reported that wholesale used vehicle prices in April averaged $11,489, up 3.6% compared to March and up 3.4% relative to April of last year.

Kontos noted full-size cars and minivans were the only segments that did not show month-over-month average price increases, and their declines were modest.

The spring/tax season market reached full bloom in April as average wholesale prices reached what will likely be peak or near-peak levels for the year based on historical seasonal trends,” he said in the latest Kontos Kommentary released just before Memorial Day weekend.

“Car prices moved in parity with truck prices overall on a month-over-month basis and showed particular strength in the off-lease segment at physical auctions,” Kontos added.

Kontos continued his regular analysis by revisiting trends involving units that typically can be within a dealership’s CPO inventory.

When holding constant for sale type, model-year age, mileage, and model class segment — using criteria that characterize off-lease units — Kontos discovered prices jumped significantly on a year-over-year basis for midsize cars but dropped substantially for midsize SUV/CUVs.

Prices for those particular midsize cars climbed 4.5% or $542 to $12,648, while prices for those specific midsize SUV/CUVs softened 1.3% or $279 to $20,902.

Kontos went on to mention more ADESA data from April that revealed average wholesale prices for used vehicles remarketed by manufacturers rose 2.9% month-over-month but slid 1.6% year-over-year. 

Prices for fleet/lease consignors increased 4.4% sequentially and 4.3% annually.

Average prices for dealer consignors moved 3.6% higher versus March and 1.1% relative to last April.

Finally, based on Edmunds data, Kontos recapped that retail used-vehicle sales by franchised dealers rose 3.8% year-over-year in April and 2.4% year-to-date. 

He went on to point out April CPO sales dropped 12.6% from the prior month’s record levels but edged 1.3% higher year-over-year, according to figures from Autodata. 

On a year-to-date basis, CPO sales are up 1.7% versus last year, Kontos concluded.

Source: ADESA Analytical Services.

Memorial Day weekend market forces push buyers to used

No doubt, dealerships are gearing up for Memorial Day sales extravaganzas with the goal of rolling plenty of vehicles over the curb.

TransUnion senior vice president and automotive business leader Brian Landau explained why used-car departments at franchised dealerships could be more active than their new-model showrooms as consumers take delivery of vehicles going into the unofficial start of summer.

“Certainly, there is waning demand following the buildup after the financial crisis,” Landau said during a phone conversation as TransUnion shared its latest auto-finance data. “People are not buying new vehicles in droves as they once did.

“But there is a shift from new-vehicle purchases to used-vehicle purchases, especially with the influx of late-model vehicles coming back into the showroom and people having more options to buy a fairly new vehicle at $15,000 less than if they bought a new vehicle,” he continued.

“If I’m getting a car that’s slightly used and I’m benefitting from the depreciation of that vehicle, I don’t necessarily finance as much. That’s where the growth is right now,” Landau went on to say. “There are consumers out there transacting, but they’re looking used vehicles, particularly late-model vehicles."

With consumers perhaps not taking on as much credit burden but choosing a used model, franchised dealers are left saddled with more significant financial obligations stemming from their new-model inventory.

And that inventory is stacked.

Edmunds experts reported on Wednesday that new SUVs and trucks are lingering longer on dealer lots than they did last year. According to Edmunds data, days-to-turn for midsize SUVs hit 76 days in April compared to 63 days during the same month in 2018. Days to turn for large SUVs reached 82 days, compared to 68 days last year.

Edmunds added days-to-turn for large trucks also surpassed the industry average at 87 days.

However, it doesn’t appear that automakers are slapping too much money on the hood to clear those new vehicles.

According to the latest installment of Guidelines from J.D. Power Valuation Services, automakers decreased incentive spending once again in April.

Power Information Network (PIN) data from J.D. Power showed incentive spending per unit fell on a year-over-year basis for the 10th consecutive month in April. Analysts pointed out that string comes after 54 months of increases.

In April, J.D. Power said incentive spending fell 6.8% to $3,561 per unit. Analysts added incentive spending as a percent of MSRP fell to 8.9%, receding below the 9% threshold for the first time since April 2016.

“Car shoppers can usually count on decent discounts over the Memorial Day holiday, but this year we’re anticipating some blockbuster bargains, including deals on SUVs and trucks,” Edmunds’ manager of industry analysis Jeremy Acevedo said in a news release.

“If you know that you want to buy a new car this year, this holiday weekend might be the best time to jump into the ring,” Acevedo continued. “Automakers are going to be scaling back production this summer to address weakening demand, and given how expensive financing has become, they won’t have the resources to throw as much cash onto other summer sales events this year.”

With summer straight ahead, spring impact still in the lanes

The unofficial start of summer is just ahead with Memorial Day weekend coming, but the wholesale market is still seeing a few signs of the spring market.

This week’s Market Insights report from Black Book indicated that the spring market has been persistent through the middle of May.

“Prices remained stable for a second consecutive week, retaining the spring season strength while luxury vehicles dropped further,” Black Book executive vice president operations Anil Goyal said in the latest report.

Based on volume-weighted information, editors noticed overall car segment values decreased by just 0.05% last week. In comparison, these market values had increased by 0.09% on average during the prior four-week period.

Among cars, Black Book reported values of luxury cars decreased the most, sliding by 0.78%.

Again looking at volume-weighted data, editors determined overall truck segment values (including pickups, SUVs, and vans) decreased by just 0.02% last week. Like cars, Black Book mentioned truck values edged 0.09% higher on average during the previous four weeks.

Within trucks, values of full-size luxury crossover/SUVs declined the most, dropping by 0.59%.

Next, Black Book shared anecdotes its representatives collected at nearly 60 sales nationwide. The rundown began with what an auction general manager in Pennsylvania told Black Book.

“Late model, off-lease units remain very hot. Dealers are clamoring for those low mileage, clean, retail ready vehicles that are in short supply,” the auction GM in the Keystone State said.

The other observations included:

— From Florida: “The sale was up and down with the result being more no-sales. The bank repossessions had the highest sales percentages.”

— From South Carolina: “Prices remain fairly stable and auction reports sales conversions around 65%. The smaller passenger vehicles continue to bring strong money.”

— From Massachusetts: “More franchised dealers were bidding and buying today, which may indicate further softness in new-vehicle sales. They are buying late model used vehicles at auction.”

Lane watch: Cleaner vehicles hit late-spring market

With observers noticing some cleaner vehicles moving down the lanes, Black Book said its data showed this year’s spring market extending into a seventh week.

This week’s Market Insights report also offered a glimpse into the latest specialty markets as the industry sets its target on summertime wholesale and retail activities.

“Markets registered a slight uptick last week, even after car prices have been up for seven consecutive weeks,” Black Book executive vice president of operations Anil Goyal said in the latest report.

According to volume-weighted data, editors noticed overall car segment values increased by 0.08% last week. That reading is just a portion of the four-week average rise of 0.22%.

In car segments, Black Book reported compact cars showed the most lift in values (rising 0.33%) while prestige luxury cars showed the highest decline (dropping 0.48%).

Again considering volume-weighted information, editors found that overall truck segment values (including pickups, SUVs, and vans) ticked up by just 0.05% last week. That level is half of the four-week average of 0.10%.

Among the truck segments, Black Book determined compact vans produced the highest rise in values (up 1.18%) while full-size luxury SUVs sustained the most significant decline (0.33%).

Turning next to what Black Book lane watchers spotted a nearly 60 sales nationwide, the top anecdotes reflected the possibility that dealers found more vehicles that were front-line ready. Here is the rundown:

—From Pennsylvania: “The auction sold around 65% today which made for a really good sale. We had a good number of clean, front-line vehicles.”

—From Indiana: “Retail is really strong here. Low consignment has resulted in more buyers than sellers.”

—From Nevada: “Several dealers expressed frustration with the low number of units available. The truck values improved but the midsize and full-size crossovers were definitely in demand.”

—From Tennessee: “The quality of the vehicles in many lanes was the best I have seen in a while.”

Specialty markets update

As they do near the beginning of each month, editors also shared their latest observations about the specialty markets. Here is what Black Book relayed:

—Collectibles: So far, Black Book indicated 2019 has been a great year for collectible vehicle auctions. “It seems that every week we hear about another record setting performance,” editors said. “We’re seeing a significant surge in the interest in later model or nearly new exotics, especially if they are ‘as new’ with little or no miles.”

—Recreation vehicles: Spring has officially arrived, according to Black Book, and many dealers have been reporting increased activity on their lots. Editors noted auction volume was up slightly over last month, with wholesale prices increasing as well.

—Powersports: Black Book explained the Powersports market sees steady gains for May as the industry enter the height of the spring selling season. Editors added most segments are up, but by smaller amounts than last month, with entry-level, mid-size, and sport bikes seeing the greatest demand.

—Heavy duty: Whether the need for late model used over the road and regional units is becoming satisfied or not, Black Book acknowledged the miles they are showing on their ECM alone is really affecting their value.

—Medium duty: Editors closed by stating used-truck prices continue to fall as an increase in new and used inventory continues to add downward pressure on the overall market.

New tool set to provide parts data on 1.4 billion vehicles

Especially for independent dealerships who have service drives catering to any vehicle that ends up in a bay, a new resource from the Auto Care Association could help find parts more efficiently.

This week, the association announced a new data product designed to connect parts data for nearly 1.4 billion vehicles, making going global easier for automotive aftermarket businesses that aren’t already and more efficient for those operations that are.

UniLink can help connect data so that subscribers can see which vehicles are similar across the world. With that information, researchers are able to determine which parts fit where and on what vehicle faster, rather than manually researching each vehicle. Now, auto care industry companies can analyze and understand vehicles across the globe and more quickly determine if current or future components can be sold in new markets.

Association officials explained this global vehicle identification solution can provide benefits including:

— Significantly reducing research time by showing which vehicles are similar across the world

— Optimization of supply chains so companies can easily and quickly identify all the country-specific vehicles that are likely to be compatible with a given product, enabling them to see where two parts are being used when only one would be necessary

— Allowing organizations to more effectively allocate resources to areas that make, sell and stock the right parts, resulting in significant cost savings

— Highlighting the potential to sell more parts in more markets with better product management data

This solution is the result of a unique collaboration between two leading organizations, the Auto Care Association and IHS Markit.  Global vehicle production and sales insight from IHS Markit helped to link the aftermarket to details from the 1.4 billion global vehicle population like never before, ultimately enabling better business decisions.

UniLink will be available for purchase later this year, according to the Auto Care Association.

To learn more about UniLink and sign up for updates, visit autocare.org/unilink or send a message to [email protected].

Focusing on pre-owned & trade-ins may help dealers steer through tight profits

Amid tight gross profits, dealers would be wise to pay close attention to trade-ins and their used-car operations to make up for lost ground.

That’s according to a survey of more than 430 dealers late last year that MAXDigital conducted with Erickson Research. 

“It’s tougher than ever to capture gross profits in today’s market, but this study shows that profits can be made by looking in the right places: trade-ins and pre-owned,” MAXDigital executive vice president Mike Cavanaugh said in a news release.

“To capture more gross, dealers need to treat trade-ins with the same level of importance as the front- and back-end, and make preowned a priority,” he said.  

The study, conducted online in November, found that dealers are pulling in median profits between $1,500 and $1,999 on used cars, but just $500 to $999 on new cars.

MAXDigital said these numbers are consistent with what the National Automobile Dealers Association found in its 2018 NADA Midyear Annual Report.

The research also showed that 60% of dealers participating in the MAXDigital study have seen new-car profits decrease in the last two years. The average dip was $170 per vehicle.

During an interview at the recent NADA Show 2019 in San Francisco earlier this year, Cavanaugh said that on the new-car side, many dealers work on a “factory money” model.

“They’re trying to sell cars and hit their numbers so they get that check. But in order to hit their volume numbers, in many cases, they’ll give away a car,” he said. “They’ll lose two, three thousand dollars on a car to do that, which will then bring down your average profitability on new vehicles.”

Untapped potential in trades

Dealers are also leaving money on the table during the trade-in process. Only 15% found trade-ins to be a major avenue of profit, the company found.

“And less than half of dealers are under allowing on the trade-in, with an average of just $250 per vehicle,” MAXDigital said.

During the NADA Show 2019 interview, Cavanaugh was asked why so many dealers don’t see trade-ins as a top profit source.

“My opinion is that, at a certain point, dealers conceded, based on a lot of that advice they were given from different people, that, ‘Hey, it’s really hard to make front-end gross profit. If you want to sell cars, you have to give it away,’” Cavanaugh said.

“‘Race to the bottom’ was a term a lot of people used all the time with front-end gross profit,” he said. “So, you saw it just deteriorate.”

So many dealers turned to the back-end of their business, focusing on drumming up profits on the F&I side through their work with various providers.

“They also kind of conceded that consumers always felt that they weren’t getting a good deal on their trade, and if they wanted good CSI, then they had to just give the customer whatever they wanted for their trade — even if they had to pay too much money,” Cavanaugh said.

“In many cases, if they wanted the bank to buy the deal, they had to make sure that they were showing a lot of money down on that deal,” he continued. ““So, you ended up overpaying for trades in a lot of cases.”

But the opportunity is not permanently lost, he said. They developed the MAX Path to Purchase Appraisal Tool to help dealers carve out the “hidden gross profit” potentially in trade-ins. According to the MAXDigital website, the platform is designed to “bring the customer into the appraisal equation, effectively answer customers’ informed questions, and still hold gross in the overall appraisal process.”

In essence, consumers want context and collaboration.

“And it wasn’t that customers wanted you to pay too much money for their car,” Cavanaugh said. “It was that they wanted you to really justify why you were giving them the price that you told them the car was worth.”

The trade-in process needs to be a “more collaborative process,” and one with data points and reasons to back it up and book values, various aspects of the car impacting that value.

In the study, MAXDigital lists these five tips for a collaborative trade-in process:

1. Have the customer evaluate the car. Walk around the car with them and discuss scratches, worn-out tires, etc.

2. Take a test drive together. Let them tell you what that noise is and why it pulls to the left.

3. Let them know what you think it will cost to repair the damages and wear and tear, so you can sell it to another customer.

4. Show them what the market value is using Kelly Blue Book, NADA or Black Book.

5. Make a fair offer on the spot, whether they buy the car from you or not

Trust the (new) process

Nearly half (45%) of respondents want to shake up the sales process. Most said they’re looking for a consultative approach and most said they want to integrate technology into the process.

“It’s not the majority, but it’s a lot, and it’s an increasing number,” Cavanaugh said of the 45%. “The more that people go to the Apple Store and have that great experience, the more that people become more innovative with technology, (dealers) see that collaborative doesn’t mean that you have to give away profit.

“And I think was a misconception in the industry for a long time, (that) if I’m transparent with my process, if I’m collaborative with the process, if I let the customer be involved with the process, that means I’m going to make less money,” he said.

“And it’s not true … this (Path to Purchase) tool that we rolled out and beta-tested, proved that to us and reinforced something that we already believed and have we’ve about for a while, but it is that those things are not mutually exclusive.”

In other words, you can be profitable and have a collaborative process.

Lane watch: Spring market appears to have peaked

Evidently the closer the wholesale market moved toward May, the more pricing intensity germinating from this year’s spring market started to diminish.

This week’s Market Insights report from Black Book offered data that suggested the spring market is beginning to lose some of its steam, especially with units not immediately heading for dealer inventory.

“Spring market strength is starting to fade as positive adjustments to values slowed down last week. We are seeing more no-sales in auto auctions than in recent weeks,” Black Book executive vice president of operations Anil Goyal said in the latest report.

Based on volume-weighted data, Black Book reported that overall car segment values increased by 0.12% last week. That figure is half of the four-week average increase tabulated by editors at 0.24%.

Among cars, Black Book noticed values of luxury cars decreased the most, dropping by 0.51%.

Again in connection with volume-weighted information, editors found overall truck segment values (including pickups, SUVs and vans) edged higher by just 0.06% last week. That’s on par with the four-week average uptick of 0.07%.

In the truck space, Black Book found that luxury crossover/SUVs had the highest decreases, with the full-size models sliding by 0.49% and the midsize units softening by 0.57%.

Turning next to what Black Book’s lane observers spotted at nearly 60 sales nationwide, the sentiment reinforced the assertion that the spring market already hits its peak. Here is the rundown:

— From Florida: “We had a normal number of consigned vehicles, but more no-sales than in previous weeks.”

— From Indiana: “Retail is good here, but dealers are not trading for front line merchandise, which is forcing them to pay up at the auction.”

— From North Carolina: “Sales percentages remain high as it seems the dealers are buying anything that rolls through the lanes.”

— From California: “The market remains good, but there more no-sales, especially on the higher mileage units.”

— From Pennsylvania: “The activity seems to have cooled a bit. There were plenty of good, clean cars, but the sales percentages were down.”

Lane watch: 5 consecutive weeks of price rises

Make it five weeks in a row of wholesale values moving higher fueled by the 2019 spring market.

According to this week’s Market Insights report from Black Book, editors noticed several car segments continued to show strong week-to-week retention, especially vehicles that might turn with buyers looking to stay within a budget.

“Broad strength in the used-vehicle market continues. Last week marked the fifth consecutive week for positive adjustments to values,” Black Book executive vice president of operations Anil Goyal said in the latest report.

Based on volume-weighted data, Black Book indicated overall car segment values increased by 0.24% last week. That figure is on par with the two-week average, which was 0.27%.

Editors noticed values of compact cars increased the most, rising by 0.66%.

Again stemming from volume-weighted information, Black Book determined overall truck segment values (including pickups, SUVs, and vans) increased by 0.16% last week. That level is nearly double the two-week average of 0.09%.

In truck space, editors mentioned sub-compact crossovers and compact vans generated the highest increases, climbing by 0.49% and 0.36%, respectively.

Turning next to what Black Book’s lane observers spotted at nearly 60 sales nationwide, the anecdotes reflected a busy spring market. Here is the rundown:

— From Florida: “The vehicles with low CRs struggled more than usual. On the other hand, trucks in good condition brought really good money.”

— From New Jersey: “One of the lanes I watched had 96 vehicles consigned and sold 58. Of the 38 no-sales, 15 were cars and 23 were SUVs. Overall, cars seemed to draw more interest and command more money.”

— From Washington: “There was a nice variety of good, clean units, but overall, the consignment was down.”

— From Pennsylvania: “Not as many buyers as last week, which resulted in an average sale.”

— From Michigan: “Consignment was lower and prices were higher. Dealers are scrambling to acquire more vehicles.”