This article is part 3 in our annual series analyzing the results of our dealer clients for the first nine months of 2016 versus 2015.
Statistics gathered regarding used vehicle sales indicate that 29.74 million used vehicles have been sold nationally through the first nine months of 2016, an increase of 2.8% over 2015. Of that total, franchised dealers were responsible for 8.9 million of the units sold and experienced a 2.5% increase. The following details the results of our dealer clients by the numbers.
Unit Sales
- 60% – Percentage of dealers who saw used unit sales decrease in 2016 vs. 2015.
- 2.6% – The average decrease in used vehicle sales.
- 32 – Average decrease in number of units sold by those reporting declining unit sales.
- 18 – Average increase in number of units sold by those reporting greater unit sales.
- $19,995 – The average sales price of a used vehicle in 2016 compared to $19,250 in 2015, an increase of $750. The average sales price is in line with the results nationally.
- 73% – Percentage of dealers reporting a drop in used vehicle gross profit margin.
- 1.1% – The average decrease in the gross profit margin.
|
|
2016
|
2015
|
Change
|
|
Gross profit/vehicle
|
$1,500
|
$1,649
|
$(149)
|
|
F&I income/per vehicle
|
$1,005
|
$ 945
|
$ 60
|
|
Combined/vehicle
|
$2,505
|
$2,594
|
$( 89)
|
- Favorable pricing and financing/leasing deals by manufacturers have made buying new vehicles more attractive and closed the decision making gap for consumers.
- A greater number of vehicles are coming off lease creating an excess supply of quality used vehicles. The same can be said of loaner vehicles. Manufacturers are now requiring dealers to substantially increase their loaner fleet. When removed from the loaner fleet, these vehicles must be classified as used and sold as such. Statistics indicate that 60% of dealers used vehicle sales are those that are 3 model years and under.
Some of the drop has been made up in F&I as it has increased by 6%. Combined, the average used car department margins are down 3%.
Dealers are well aware that gross profit dollars on a per vehicle basis have always been higher than that of new vehicles and are an important profit center for their dealerships. With the decline in margins, dealers need to continuously manage their used vehicle inventory by monitoring aging, inventory mix and costs to maintain sufficient profitability.
If you have any questions regarding this article, please contact Charlie Paolino at CPaolino@DowneyCoCPA.com or at 800-849-6022.
