In part two of our annual trends and analysis newsletter, we will examine our results as they pertain to used vehicle sales. Our analysis is based on retail used vehicle sales only and is compiled from our client dealer results for the first nine months of 2014. The results of our analysis are broken down overall and by dealership total sales volume.
Used Vehicle Sales Dollars and Units
| Percentage of Dealerships Who: | Total Dealership Sales | |||
| Overall | < $20 Million | $20-$30 Million | >$30 Million | |
| Increased Used Vehicle Sales Dollars | 67% | 59% | 80% | 64% |
| Increased Used Vehicle Unit Sales | 56% | 41% | 67% | 64% |
Our study of used vehicle sales indicates that a majority of dealers increased their sales volume compared to the same period a year ago. As was noted with new vehicle sales, the percentage of dealers who saw unit sales increase was less than those who experienced sales volume increases. The disparity comes from the fact that the average used vehicle sales price has increased 4.3%. This translates into greater sales dollars even though unit volume has decreased. Part of the increase has been fueled by late model vehicles coming off lease that have greater value than trade-ins. Mid-size ($20-$30 million) dealerships experienced the most significant increases.
| For Dealerships Who Experienced Increases: | Total Dealership Sales | |||
| Overall | < $20 Million | $20-$30 Million | >$30 Million | |
| Average Percentage Increase in Units Sold Over Last Year | 26% | 31% | 25% | 21% |
| Average Number of Units Increased | 61 | 44 | 56 | 84 |
For those dealers who did increase used vehicle sales, the results were extremely positive. Strong increases were noted on both a percentage basis and on the number of units. As evidenced above, dealership size has a tremendous effect on the average number of units sold.
Profitability
| Total Dealership Sales | ||||
| Overall | < 20 Million | 20-30 Million | >30 Million | |
| Average Gross Profit Percentage per Vehicle | 9.4% | 9.1% | 9.8% | 9.3% |
| Average Gross Profit Dollars per Vehicle | $1,822 | $1,764 | $1,951 | $1,737 |
| Average Change in Gross Profit Dollars per Vehicle | $7 | $2 | $(28) | $62 |
| Percentage Who Increased Gross Profit Dollars per Vehicle | 49% | 41% | 33% | 73% |
| Percentage Who Increased Gross Profit Dollars >$50 | 67% | 86% | 50% | 63% |
Note: This chart excludes F&I income and dealer documentation fees.
Profit margins on a percentage basis are fairly consistent across the board with mid-size dealerships holding the strongest grosses both on a percentage and dollar basis. What is interesting is the change in average gross profit dollars. While smaller dealers held steady, mid-size dealers experienced a drop. Larger dealers were able to increase their gross profit dollars but that appears mainly because they lagged behind the other groups in the previous year. While few small and mid-size dealerships had a little increase or even a slight decrease in their gross profit dollars, those that did were able to achieve solid additional dollars per unit. Our analysis indicates that used vehicle sales have not experienced the same increases that were seen with new vehicles. However, dealers should be heartened by the fact that margins have remained strong as well as gross profit dollars.
If you have any questions regarding this article, please contact Charlie Paolino at CPaolino@DowneyCoCPA.com or 800-849-6022.
