Despite Internet, used-car operations profitable, from Automotive News.
Dealers complain that Internet-driven price transparency has decimated profits in their new-car departments.
That same transparency applies to used vehicles, but the used-car department is the second most profitable operation at a dealership, after parts and service, data from the National Automobile Dealers Association show.
Certainly, used-vehicle margins have been under pressure. But changes in dealership operations, including more aggressive inventory management and used-vehicle pricing strategies, have allowed dealerships’ used-car departments to stay solidly in the black.
To see the impact of the Internet on used-car operations, consider this: The spread between the wholesale prices that dealers pay at auction for used vehicles and the retail prices that those dealers quote in their online listings has fallen $1,000 since 2008 to $4,000 now, said Larry Dixon, an analyst at NADA Used Car Guide.