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This Week in Used Cars – May 2019

Used-car sales climb 3% amid demand shift (Auto Remarketing)

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.

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Dealers turn to Craigslist to meet used-car demand (Auto News)

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.

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Car Dealership Inventory: Asset or Liability? (Wards Auto)

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.

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