Used Car Marketing Catapults Franchise Dealers Ahead of Pre-Owned Lots

Used Car MarketingThe used car marketing sales numbers were getting closer for a few years, and finally in 2011 a shift took place. Franchise dealers actually outsold their used-car counterparts with just over 13.8 deliveries, while independent used car lots sold just under 13.8.

Since then, the numbers have continued trending in favor of the franchise dealers. In 2012, new car dealers sold 14.9 million and used car companies delivered 14 million. Last year, the franchise dealers sold 15.7 million, while the used car lots checked in at 14.3 million.

Used Car Marketing Changes Over the Years

All this begs the question, What put the franchise dealers over the top? Tom Kontos is executive vice president and chief economist for ADESA Analytics Services. He spoke with and gave his perspective on the matter. Among other things he cited the following potential reasons:

· Franchise dealers are stepping up their used car marketing. Today’s automotive dealers have a much better understanding that used cars can be a tremendous profit center, and they are making adjustments accordingly.

· Money spent by new car dealers on used car marketing is paying off. Pre-owned car departments are being renovated, inventories are being expanded, and talented sales personnel are being shifted to this department.

· New car dealerships have more credit sources available to them, giving them an advantage many used car stores do not possess.

· Franchise automotive dealers have access to more late-model used cars, some of which is due to lease returns.

· Rather than auction off a large percentage of their trade-ins (and seeing them end up on the used car lots), many franchise dealers are keeping more of these cars to sell in their own used car departments.

Prices Essentially the Same

Mr. Kontos must be right, because the reason for the shift certainly doesn’t appear to be price. Some people may have the perception a used car dealership can offer lower prices due to less overhead. However, recent data compiled by automotive pre-owned search engine company iSeeCars suggests otherwise.

They examined the sales of more than 20 million pre-owned cars at both new and used dealerships nationwide. Their research showed that when comparing similar cars, prices at franchise dealerships were just 0.26% higher than at used car dealerships.

The average franchise dealer pre-owned car came in at $18,653 with average mileage of 56,622; meanwhile, used car dealer pre-owned cars were $17,459 with average mileage of 65,308.