CEO Bryan DeBoer said Lithia’s current ratio for used-to-new vehicles is 1-to-1; he expects that ratio to approach 2.3 used to 1 new.
“Our ability to retail a full age range of used vehicles is a hallmark of our growth,” DeBoer said on an investor call last week. “Sourcing the right used vehicle drives this business line.”
At Asbury Automotive Group Inc., meanwhile, used-vehicle sales slid alongside new on a same-store basis. The challenge: finding inventory. Asbury’s same-store used-vehicle retail sales dipped 0.4 percent to 21,176.
On an earnings call, CEO David Hult said the trick isn’t just acquiring as much inventory as possible; it’s doing so profitably.
“We’re not operating well in pre-owned,” Hult said. “When we figure out pre-owned, and we will, we see a lot of opportunity to continue growing.”
According to John Hartman, senior vice president of operations, 53 percent of the used vehicles Asbury sold in the second quarter came from customer trade-ins. Fifteen percent were sourced from the auction lane, and 11 percent came from off-lease vehicles, with the remainder either acquired from service lanes or purchased directly from consumers or other sources. Buying directly from customers is most lucrative, Hartman said. AutoNation
AutoNation saw its same-store used-vehicle sales grow 4.5 percent in the quarter to 61,665, aided by inventory mix, newly named CEO Cheryl Miller told analysts. Same-store new-vehicle sales fell 9.8 percent to 69,827.
Miller said the company’s group of five AutoNation USA standalone used stores in the second quarter broke even for the first time and several were profitable.
She told analysts and investors on a call last week that the company is making “steady progress” on the portfolio of stores but doesn’t plan to open any additional outlets this year.
AutoNation announced plans to launch the stores in late 2016 and paused expansion plans last year.
Executive Chairman Mike Jackson told analysts on the same call that the company has added to AutoNation USA the same one-price philosophy and customer experience it offers for its pre-owned business at franchised stores. It’s now working to boost sales and profitability.
“We’ll take a couple of pilot stores in the third quarter and see how we bring the volume to higher levels, which is right now about 100 a month through the stores,” Jackson said.
Penske Automotive Group Inc. is slated to release its earnings on Tuesday, July 30.
Melissa Burden and David Muller contributed to this report.
