40 Million Used-Car Sales?

The used-car market will continue to be where it's at for franchised dealers, says Tom Webb, chief economist for Manheim Consulting, a unit of Manheim Auctions. Used-car sales rose 4% to nearly 37 million units last year. Next year, sales are expected to hit 40 million units, Webb tells Ward's at the National Automobile Dealers Assn. convention in San Francisco. He projects light-vehicle sales will

The used-car market “will continue to be where it's at” for franchised dealers, says Tom Webb, chief economist for Manheim Consulting, a unit of Manheim Auctions.

Used-car sales rose 4% to nearly 37 million units last year. Next year, sales are expected to hit 40 million units, Webb tells Ward's at the National Automobile Dealers Assn. convention in San Francisco.

He projects light-vehicle sales will go from 11.6 million in 2010 to more than 13 million units this year. Webb acknowledges his forecast is slightly higher than most predictions.

Franchised dealers often struggle with slim new-car margins. Pre-owned vehicles offer greater profit margins, which is why so many franchised dealers have stepped up their used-car operations, especially when new-car sales plummeted to 10.4 million units in 2009.

Used-car sales dropped, too, in 2008 and 2009, but not as dramatically as new-car deliveries.

Used vehicles will outsell new ones by a 3:1 margin, Webb says. “Retail sales and profits continue to shift in favor of used cars.”

Dealers often complain about difficulties in obtaining used-car stock because of high demands and low supplies.

But Webb says, “It's not that tough to get inventory. Cars go unsold at auction every day. When dealers complain about the availability of used cars, they really are complaining about prices.”

He says he is happy “for the first time in a long, long time” to give an upbeat economic report.

But he adds, “We will fail to achieve previous peaks in employment, household net worth and new-vehicle sales prior to the next recession.” He declines to give an estimated time of arrival for that.

TAGS: Dealers Retail
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