Used vehicles remain an attractive alternative to consumers due to the lack of supply of new vehicles. However, the used vehicle market presents its own set of challenges for dealers. Based on our dealer client financial information, we have compiled the following results for used retail sales.
Unit Sales Lagging
- Over 81% of our dealer clients reported a decline in used retail units sold. On average, they sold 52 fewer units when compared to the same period last year.
- The average sales price of a used retail vehicle was approximately $31,000. Similar to the prior year, the average sales price increased by an astonishing 17%.
Total Department Gross Profit
- In spite of an increase in gross profit per unit sold, the total gross profit for the department has declined for 65% of our dealers due to the reduction in unit sales.
Retail Used Vehicle Profitability per Unit Still Strong
| 2022 | 2021 | 2020 | |
| Gross Profit/Vehicle | $2,528 | $2,352 | $1,414 |
| F&I Income/Vehicle | $1,728 | $1,399 | $1,181 |
| Combined/Vehicle | $4,256 | $3,751 | $2,595 |
In recent months the used vehicle market has softened. Wholesale prices have begun to decline. Sales are slowing. Days of supply is inching up. Rising interest rates will cause monthly payments to increase and price some potential buyers out of the market. Recession fears loom large. All of this means dealers need to be laser focused on their used vehicle departments.
If you have any questions regarding this article, please contact Charlie Paolino at CPaolino@DowneyCoCPA.com or at 800-849-6022.
