With many customers still having trouble getting loans for new cars, lower-priced used cars are increasingly popular. For dealers, that means used-car revenue is up. And, in many cases, so are profits.
CarMax Inc., the nation’s largest seller of used cars with 103 superstores, said it’s hiring for 1,200 store positions across the country. While part of that is for seasonal staffing, it’s also part of a broader expansion. The news comes days after AutoNation, the largest seller of new cars with 251 new vehicle franchises, said it’s moving more aggressively into the used car business. AutoNation has opened 16 Value Vehicle outlets, and six more are expected to open by next spring. These stores stock reconditioned used cars that it previously would have sold at auctions.
AutoNation’s recent third-quarter results show why: Used car revenue this year is up 26%. For new cars, sales are up a comparable 18%. Take a look at the latest quarterly profit comparisons, too: CarMax reported a gross profit per used car of $2,205 this year, while AutoNation reported a gross profit per new vehicle of only $1,994.
I believe new car manufacturers should definitely take note: The business case for used cars is looking more attractive to customers and dealers these days. Overall, this can be a positive and a negative for the automotive industry and might influence manufacturers to consider selling many of their vehicles to large business for fleet use as they will be worth more when sold as used later on down the road.
Morgan Duff
CarMax Inc., the nation’s largest seller of used cars with 103 superstores, said it’s hiring for 1,200 store positions across the country. While part of that is for seasonal staffing, it’s also part of a broader expansion. The news comes days after AutoNation, the largest seller of new cars with 251 new vehicle franchises, said it’s moving more aggressively into the used car business. AutoNation has opened 16 Value Vehicle outlets, and six more are expected to open by next spring. These stores stock reconditioned used cars that it previously would have sold at auctions.
AutoNation’s recent third-quarter results show why: Used car revenue this year is up 26%. For new cars, sales are up a comparable 18%. Take a look at the latest quarterly profit comparisons, too: CarMax reported a gross profit per used car of $2,205 this year, while AutoNation reported a gross profit per new vehicle of only $1,994.
I believe new car manufacturers should definitely take note: The business case for used cars is looking more attractive to customers and dealers these days. Overall, this can be a positive and a negative for the automotive industry and might influence manufacturers to consider selling many of their vehicles to large business for fleet use as they will be worth more when sold as used later on down the road.
Morgan Duff
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