Used-car sales in April beat year-ago figures by 3.0%, according to estimates from Cox Automotive, which said the pre-owned SAAR climbed to about 39.3 million for the month.
That compares to a used-car SAAR of 38.1 million in April 2018 and a 39.0 million used-car SAAR in March, the company said in its Manheim Used Vehicle Value Index Data & Commentary released Tuesday.
In a separate forecast released late last month, Edmunds was calling for 3.4 million used-car sales in April, down from 3.7 million in March. The resulting used-car SAAR was projected at 39.1 million, compared to 39.2 million in March.
Going back to the Cox Automotive data, such pre-owned strength observed in April continues what the company described in Monday’s Data Point report as a “shift in vehicle demand, away from new and toward used.”
New-vehicle sales, which fell 1.7% year-over-year in April and had a SAAR of 16.4 million, compared to 17.4 million in March and 17.2 million a year ago, had dipped 2% percent in the first quarter, according to the two reports from Cox Automotive.
Mike Stedem has been scouting classified ads for inventory for the better part of five decades. But in that half-century, there have been few times when sourcing used-vehicle inventory from the street was as integral as it is now.
With fewer trade-ins coming in the door, the used-vehicle inventory “is as tight as I have ever seen it,” said Stedem, the principal of Hyundai of Slidell in Louisiana.
“Last week we drove 90 miles to go buy a truck that we’d seen an ad on,” he said.
It is a sign of the changing and challenging used- vehicle landscape, as new-vehicle sales cool off and both new and lightly used vehicles become more expensive.
In a time of shrinking margins, better-educated consumers and increased demand for transparency, dealerships need to maximize all their assets to survive and thrive.
One of the dealership’s most visible assets – and often the biggest source of wasted budget and opportunity – is vehicle inventory. Choices made here can quickly make or break profitability.
Holding on to Heartache?
The holding cost of each vehicle is calculated by taking a dealership’s overhead expenses and dividing it by the number of vehicles in inventory. These holding costs start to accumulate the moment a dealership acquires a vehicle. An NCM Associates study says the average holding cost for a vehicle is $37 per car per day. It doesn’t take long for a vehicle’s profit potential to erode to nothing.