Lithia Motors is prioritizing used-car sales to close out the year and into 2026, in part because of uncertainty surrounding new-car sales, President and CEO Bryan DeBoer said during a call with analysts on Oct. 22
The nation’s largest megadealer group is adopting the strategy to navigate an evolving tariff environment, cooling demand for electric vehicles, shrinking new-car margins and the wild card of OEM incentive levels.
“It’s the biggest area that we built the ecosystem for,” DeBoer said, referring to used cars in general, and in particular Lithia’s “Value Auto” channel devoted to selling 9-year-old cars, including those up to 20 years old.
Used vehicles are an avenue to lure buyers
Lithia, based in Medford, Oregon, is the nation’s biggest auto retailer, with 300 locations in the U.S., and another 136 in the United Kingdom. DeBoer said the idea is that older, more affordable, used cars are an entry-level model to build loyalty. Down the road, buyers may trade up to new, maybe even luxury vehicles.
“Our strategic focus on used vehicles provides another durable layer in any cycle and affordability level,” DeBoer said on the call.
Lithia reported Q3 net income of $218.6 million, down 1.1% year over year. Used-car retail revenue increased 11.8% to $3 billion, on a same-store basis, while new-vehicle retail revenue increased just 5.5%, to $4.6 billion.
The company reported its Value Autos used-car segment accounted for 19% of its retail used-vehicle sales with units selling for an average price of $14,849. DeBoer said unit sales in the value segment increased 22.3% YoY for the quarter.
Dealerships balk on pre-owned vehicles
DeBoer said Lithia often gets pushback from dealerships against selling older used cars. However, by working with sales and service department managers, the company is able to convince its network that they are in the used-car business, and that in the long run, it’s worth the money to recondition older used cars, he said.
“Once those two people decide, your salespeople and your technicians are going to convince you, you shouldn't do it,” DeBoer said. “Why? Because they get comebacks, okay? Meaning that there’s a car that breaks 45 days later, or four days later, and they’re trying to keep a car deal together, rather than just take the person out of the car, sell them another car, and go fix that car, so it’s an easy experience for your consumer.”
He said the company avoids buying pricy used cars at auctions, and self-sources as many as possible from trade-ins and so-called street purchases, from drivers who bought their vehicle somewhere else. Lithia said it self-sourced 74% of its used-vehicle inventory during Q3.
Lithia has extensive experience integrating newly acquired dealerships, having grown from $12.7 billion revenue in 2019, to an annual rate “approaching $40 billion” today, DeBoer said.
However, DeBoer noted it always takes a couple of years to get everyone on board with selling older used cars.
