Automotive News - April 24, 2017 - v2 - S3

Used vehicles remain lucrative for dealer groups
Sales make up more
than 25% of revenue
for 3rd year in row

2017, up 4.4 percent. Each of the groups except AutoNation and Asbury Automotive
Group Inc. recorded year-over-year usedcar sales gains.
Of the top 100 groups, 75 posted higher
retail used-vehicle sales.

John Irwin
jirwin@crain.com

s new-car demand appears to be
leveling off, the largest U.S. dealership groups are seeing usedcar sales remain a steady, and
hefty, percentage of their total revenues.
That's one of several insights from the
Automotive News Data Center, which
compiled data from survey information to
produce its annual list of the top 100 dealership groups in the U.S., as ranked by
used-vehicle retail sales.
Revenue from used-vehicle retail sales
totaled $57.79 billion at the 100 largest
dealership groups in 2016, up 6.6 percent
from $54.23 billion at those same groups in
2015 and good for about 27 percent of the
groups' total revenue. It is the third consecutive year that used-vehicle sales have accounted for more than a quarter of revenue
at the largest groups.
In total, the top 100 dealership groups
sold 2.84 million used retail units in 2016,
up 6.3 percent from the 2.67 million units
sold in 2015.
The gains in used-vehicle sales at the
largest dealership groups mirror larger
market trends. Used-car demand and sales
have risen in recent years as high-quality,
off-lease vehicles return to market, offering
consumers a cheaper alternative to increasingly costly new cars.
The glut of off-lease vehicles, the result of
a surge in leasing this decade, has pushed
used-car pricing down following years of
strength, by some measures faster than
most predicted. For instance, the seasonally adjusted NADA used-car pricing index
was down 8 percent in February from a
year earlier.
While that could cause some headaches
for lenders, automakers and new-car deal-

Newcomer at 59

List newcomer Island Auto Group of New York City is No. 59. Their goal is to sell as many
used cars as new cars, says co-owner Josh Aaronson, front. "We always want more."
ers, demand for used vehicles is unlikely to
slow. After seven consecutive years of
growth, used-car retail sales are set to rise
again in 2017, according to the 2017 Manheim Used Car Market Report. Dealerships
that speed up used-vehicle inventory returns and reduce selling expenses could
continue to benefit even as margins slip,
Manheim says in the report.

'Tremendous opportunity'
AutoNation Inc. is one of several publicly
traded groups that are doubling down on
used-car offerings this year in the face of
rising demand.
The company is reviving its AutoNation
USA name for a series of used-vehicle
stores. The first two of the company's five
planned stand-alone used-car stores will

open in the second quarter, with the next
three opening by year end. Another 20 are
in development.
"There's just a tremendous opportunity
in the used-car business," AutoNation
spokesman Marc Cannon said. "And there
are a tremendous amount of consumers
looking for that product."
The AutoNation USA stores will compete
against market giant CarMax Inc. and
used-only stores from other new-car retailers such as Sonic Automotive Inc.'s
EchoPark and Asbury Automotive Group
Inc.'s Q auto.
AutoNation's used-vehicle retail sales
eased 0.7 percent in 2016 to 225,713, making
it No. 2 on the used-vehicle retail ranking.
The seven publicly traded companies
sold about 1.5 million used vehicles in

A newcomer to this year's list is Island
Auto Group of New York City. Island, of
Staten Island, made a splash by acquiring
11 dealerships over the course of the year,
in addition to launching two used-only locations. It ranks No. 59 on the list with
10,704 used retail units sold.
Island co-owner Josh Aaronson said the
dealership group is looking to improve its
new-car-to-used-car retail ratio to one-toone in the near future. Island sold 8,000
more new vehicles than used in 2016.
"The goal would be one-to-one," Aaronson said. "Having dealerships in New York,
we're a little landlocked in terms of the
used-car inventory we can hold. But we
turn about 100 percent of our inventory.
We always want more."
Thirteen dealership groups sold more
used than new vehicles in 2016.

Top 10
The 10 largest dealership groups by usedcar sales remain nearly unchanged from
last year's list, with eighth-place Asbury
and ninth-ranked Larry H. Miller Dealerships swapping spots from a year earlier.
CarMax Inc. remained the largest U.S. retailer of used cars by far, selling 619,936
units in 2016, up 6.5 percent. CarMax sold
more used vehicles than the next three
largest used-car sellers - AutoNation,
Penske Automotive Group Inc. and Group
1 Automotive Inc. - combined.
CarMax added 15 stores in its fiscal year
ended Feb. 28, bringing its store total to 173
in the U.S.
It said in April that it plans to open 15
stores during its current fiscal year and between 13 and 16 stores in 2019. c

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