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lsquoUsed cars where itrsquos at for dealersrdquo says Manheim Chief Economist Tom Webb
<p> <strong>&lsquo;Used cars where it&rsquo;s at for dealers,&rdquo; says Manheim Chief Economist Tom Webb.</strong></p>

Franchised Dealers Lead in Used-Car Sales

Dealers gained used-car market share at the expense of private-party transactions because people selling their cars found dealers willing to pay top dollar for them, the &ldquo;2012 Manheim Used-Car Report&rdquo; says.

LAS VEGAS – Franchised dealers edged past their independent counterparts in used-car sales last year.

Franchised dealers sold slightly more than 13.8 million pre-owned vehicles in 2011, an 8% increase, according to the “2012 Manheim Used-Car Report” released at the National Automobile Dealers Assn. convention here.

Independent used-car dealers sold slightly less than 13.8 million units last year, a 5.6% increase. Private-party sales rose 1% to 11.2 million units.

The report says dealers gained used-car market share at the expense of private-party transactions. That’s because people selling their cars found dealers willing to pay top dollar for them.

Dealerships also offered readily available credit to used-car buyers.

Franchised dealers’ strong showing in the pre-owned market stems from their paying more attention to that area of business in recent years, NADA auto analyst Jonathan Banks tells WardsAuto.

“Dealers have retooled their used-car operations, putting some of their best people there and using inventory-management technology to make it work more efficiently,” he says.

Total used-vehicle sales of 38.8 million units in 2011 were the strongest in four years. Limited supplies and stable demand has kept pre-owned prices high, averaging about $14,500.

Franchised dealers sold 1.7 million units through auto makers’ certified pre-owned programs, a record high and a 6.4% increase in 2011, despite a tight-supply of late-model vehicles.

“Used cars are where it’s at for dealers,” says Manheim Chief Economist Tom Webb.

The Manheim Used-Vehicle Value Index peaked in May at 127.8 and throughout 2011 remained at historically high levels, adjusted for mileage and seasonality. The index averaged 124.9 for the year, a 3.7% gain over 2010.

Small and midsized cars had substantially higher prices in 2011, while other segments showed flat pricing or declines.

New-vehicle sales last year rose 10%, to 12.8 million, falling short of Manheim’s 13.1 million-unit projection.

More light-vehicles would have been sold in 2011 were it not for the Japanese earthquake and tsunami that devastated auto production “much more than some people think,” Webb says.

WardsAuto predicts light-vehicle sales to hit 14 million this year. Other forecasts range from 13.6 million to 13.7 million units, reflecting “some people being cautious,” Webb says.

“We are more likely to have an upside surprise than a downside surprise,” he says of 2012 vehicle sales. “Upside is when auto makers maintain price discipline. Downsize is when you sell incentives.”

The U.S. economy slowly is healing, but “we will still fail to achieve previous peaks in employment, household net worth and new-vehicle sales” in the near future, Webb says. “We have a recovery going on, but we are coming out of a deep hole.”

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