Used-vehicle-only retailers and a few of the six publicly traded dealership teams of their newest quarters mentioned they favored boosting gross revenue per used automobile they retailed and never essentially rising gross sales quantity.
For used-retail large CarMax Inc., maintaining gross revenue per automobile steady was a precedence, CEO Invoice Nash mentioned final month. On-line used-vehicle retailers Carvana Co. and Vroom Inc. additionally mentioned they swapped gross sales quantity development — which they chased because the e-commerce used-vehicle market heated up in 2020 and 2021 — to work on enhancing per-vehicle gross revenue.
One of many public teams, Asbury Automotive Group Inc., mentioned it targeted on profitability in its used-vehicle facet of the enterprise.
“We simply decided that it did not make sense to chase quantity,” CEO David Hult mentioned throughout Asbury’s earnings name on April 25.
The retailers and dealership teams additionally mentioned they grappled of their newest quarters with different components impacting used-vehicle companies: tighter availability of late-model used-vehicle stock, heavier acquisition exercise at wholesale auctions by rental automotive corporations and elevated client demand for extra reasonably priced autos.
CarMax saved per-vehicle revenue regular in its newest fiscal quarter, ended Feb. 28, regardless of widespread affordability and financial considerations. It took in gross revenue of $2,277 per used automobile it retailed, up $82 from the year-ago interval. Revenue preservation got here on the expense of quantity. The corporate’s retail gross sales tumbled 13 % to 169,884 autos in contrast with the year-earlier interval.
In an April 11 earnings name, Nash famous exterior title information confirmed market share beneficial properties the retailer made within the first half of its fiscal 12 months had been offset by share losses within the second. However that trade-off was deliberate: Nash mentioned prioritizing per-vehicle profitability over near-term market share was the correct objective.
Carvana offered 79,240 autos within the quarter ended March 31, down 25 % from a 12 months earlier, because it backpedaled on gross sales quantity development to concentrate on rising per-vehicle income.
The corporate reported $1,388 in retail automobile gross revenue per unit, which it describes as its combination retail gross revenue in a interval divided by variety of retail models offered in that interval. That was up from $808 within the year-earlier interval. Carvana attributed the rise, partly, to trimmed acquisition, reconditioning and transport prices tied to these autos. Carvana’s complete gross revenue per automobile, which mixes retail, wholesale and different GPUs, rose 52 % to $4,303.
The corporate plans to “preserve the pedal down” on automobile economics for the following 9 to 12 months, CEO Ernie Garcia mentioned throughout a Could 4 earnings name. As soon as it achieves that, Carvana will flip its consideration again to development and capturing extra market share, he mentioned.
Vroom’s gross sales quantity fell within the first quarter as the corporate saved working via its long-term marketing strategy, which features a objective to prioritize enhancements in automobile economics over development. The corporate offered 3,933 autos through e-commerce, down 80 % from 19,473 within the year-earlier interval.
Vroom reported $2,552 complete gross revenue per automobile offered through e-commerce within the first quarter, up 45 % from $1,763 within the year-earlier interval.
Vroom expects a “significant slice” of its gross sales in second-quarter 2023 to be from aged autos, which can put strain on gross revenue per automobile, CEO Tom Shortt mentioned through the firm’s first-quarter earnings name Could 10. He expects that to clean out within the second half of the 12 months as Vroom begins promoting a higher mixture of newer autos that web extra revenue.
Asbury Automotive Group Inc. offered 32,989 used autos at retail through the first quarter, down 14 % from a 12 months earlier. The corporate’s common gross revenue per retail used automobile stood at $2,141, down 14 % from a 12 months earlier.
Hult mentioned Asbury’s used-vehicle gross revenue is set extra by the quantity it pays to accumulate the automobile slightly than its sale worth “as a result of the market dictates what the promoting worth is gonna be.”
Hult mentioned Asbury targeted on trade-ins, off-lease fashions and shopping for autos instantly from prospects slightly than an aggressive technique of sourcing used autos from channels similar to auctions. He mentioned practically 70 % of Asbury’s quantity within the quarter was from trade-ins and off-lease autos.
“We felt it was a greater trade-off to have decrease quantity and better gross income, which actually generate a greater [earnings per share result] for us total,” Hult mentioned.
AutoNation Inc.’s gross revenue per used automobile retailed rose to $2,117 within the first quarter, up greater than 35 % from $1,566 a 12 months in the past. AutoNation mentioned that greater than offset decrease unit gross sales, which got here in at 67,539, down 15 %.
As of the top of 2022, the inhabitants of used autos 5 years or youthful in age had dipped by about 10 % from 2019, CEO Mike Manley mentioned through the firm’s first-quarter earnings name April 20. Automobile ages three years or youthful had been down greater than 15 % from 2019, he added.
“Final 12 months within the first quarter we made the tactical determination to realign, reposition and scale back used-car stock, and I believe that proved to be a prudent transfer because the 12 months went on,” Manley mentioned. “It did, nonetheless, set us up for [challenges] on unit quantity in Q1.”
reported $1,689 in gross revenue per used automobile retailed within the first quarter. That is down 16 % from $2,005 a 12 months in the past. It offered 45,437 retail used autos within the interval, up 3.7 %.
To supply used stock, Group 1 is continuous to concentrate on “natural sourcing efforts,” together with acquisitions to speed up buyer trade-ins and repair drive acquisitions, CEO Daryl Kenningham mentioned through the firm’s first-quarter earnings name April 26.
Lithia Motors Inc. noticed its common gross revenue per retail used automobile plunge 30 % to $2,120 within the first quarter. Lithia offered 78,142 used retail autos within the quarter, up 6 %.
CEO Bryan DeBoer, through the firm’s first-quarter earnings name April 19, mentioned used-vehicle GPUs had been extra resilient than anticipated.
COO Chris Holzshu, additionally through the name, mentioned Lithia in March “continued to see enchancment within the used-vehicle market as stock changes had been made to fulfill demand of lower-priced models.”
Penske Automotive Group Inc.’s common gross revenue per used automobile retailed was $1,808, down 21 % from the primary quarter of 2022. The corporate offered 67,836 used autos, down 0.6 %.
Automobile gross sales at Penske’s standalone used-vehicle CarShop places decreased 2 % to 19,165 models within the quarter, CEO Roger Penske mentioned through the firm’s first-quarter earnings name April 26. Variable gross revenue per automobile declined 5 % as automobile acquisition costs, plus reconditioning prices and logistics, continued to “affect buyer affordability and our profitability,” he mentioned.
He added that the corporate continues to discover automobile sourcing and price enchancment applications to enhance CarShop’s profitability.
Common gross revenue per used automobile at Sonic Automotive Inc.’s franchised dealerships fell 6 % to $1,626 within the first quarter. Used-vehicle gross sales at its franchised dealerships had been down 7 % to 25,107 models within the quarter.
Sonic mentioned the typical gross revenue per automobile and F&I at its used-only EchoPark enterprise was $1,907 within the first quarter, a drop of 30 %. EchoPark shops offered 19,980 used autos, hovering 34 %.
“Within the used-vehicle enterprise, wholesale public sale costs for 3-year-old autos unexpectedly rose over 6 % because the starting of the 12 months as practically new stock continued to face elevated demand from rental automotive corporations and sellers at public sale,” CEO David Smith mentioned through the firm’s first-quarter earnings name April 27.
President Jeff Dyke, additionally on the earnings name, mentioned in January and February the auto retailer was shopping for autos at public sale within the $24,000 vary. However, Dyke famous, in two weeks in March, these automobile costs rose to $27,500 or $28,000.
The uptick in pricing has impacted gross sales at EchoPark, Dyke mentioned, who famous the enterprise unit’s quantity was spiking in January, February and early March.
Mark Hollmer, Gail Kachadourian Howe, John Huetter and Jack Walsworth contributed to this report.