5 Reasons For Used Car Dealers To Be Thankful
It’s the time of year to give thanks, and there is plenty to be thankful for in the used car industry this year. Let’s take a look at five recent developments that signal an industry bursting with potential.
- High-Mileage Vehicles Are Holding Their Value. And it’s because demand is incredibly high. The Q3 Edmunds Used Vehicle Market report showed that the rate of depreciation from 50,000 to 100,000 miles is strikingly similar to that of vehicles from 100,000 to 150,000 miles. Edmunds analysts suggest that following the recession more people saw their odometers tick into six figures only to find that newer vehicles are still reliable in that range. This has resulted in many consumers getting past the psychological barrier that once prevented them from considering a vehicle with more than 100,000 miles.
- SUVs and Trucks Are More Popular Than Ever. This is fantastic news for used car dealers in that more expensive vehicles are in higher demand. In September, Edmunds reported that midsize sedans – once the highest selling segment as recently as 2014 – has dropped to fifth behind SUVs, large trucks, midsize SUVs and compact cars. With the top three segments being higher-priced vehicles, used car dealers stand to bring home a greater premium on these hot models.
- Vehicle Service Contract Penetration Is Projected To Increase Through 2024. Consulting firm Colonnade states that 85 million vehicles were sold with a vehicle service contract in 2016, and market trends project that figure to grow to 108 million vehicles by 2024. With an estimated 46% of Americans unable to pay for emergency expenses of $400 or more, the opportunity to find additional profit on the back end of deals is looking more promising than ever before.
- Used Car Dealers Are Feeling The Buzz. Cox Automotive’s Sentiment Index measures optimism among used car dealers, which has been on the rise for independent dealers. While overall scores are still lower than many dealers would like, they are on the rise, which tells a story of dealers on the ground feeling hopeful that business is on the verge of picking up quickly.
- Used Cars Are Selling For More And Moving Quickly. In Q2 of this year, Edmunds reported the highest ever average retail price for used cars - $19,227. It was also the first time the second quarter had ever surpassed 10 million vehicles sold. With so many vehicles moving at such a high price, used car dealers are riding an industry wave that is sure to benefit the bottom line.