By Cliff Banks, Ward’s Dealer Business
A recent study by DealerTrack shows the average gross profit on used vehicles with one owner was 23 percent higher than it was for vehicles with two or more owners.
Additionally, vehicles with one owner had an average 26-day turn, five days faster than vehicles with more than one owner.
DealerTrack compiled the study using 2008 data from a national dealer group that uses its inventory-management solution. The study integrated data from the inventory-management tool with Carfax history reports.
It measured data from 49,897 retail or lease transactions involving vehicles with one owner and 122,970 transactions for vehicles with two or more owners.
“This DealerTrack study proves the value of Carfax data for used-car dealers looking to make more money and sell cars faster,” says Larry Gamache, communications director at Carfax. “Dealers can run a Carfax report at auction or trade-in to identify 1-owner cars early and cherry pick their inventory. In today’s economy, used-car shoppers are looking for great values like these.
“While this study highlights the impact of a single vehicle attribute, it strongly suggests that dealers can realize even greater benefits from applying analytical tools to manage their inventory more systematically,” says Tim Zierden, general manager of inventory at DealerTrack.
“Using a robust inventory management solution driven by transaction-based data can help dealers stock the right vehicles, turn them faster and focus on profitability,” he says. “Unlike market pricing utilities that focus on price alone, our data-rich inventory solutions help dealers uncover factors that drive higher profits, the most important consideration in the current economic environment.”
Dealers, Zierden says, are becoming more proactive in their sourcing of used vehicles.
“They are going out and finding the cars they need,” he says. “Dealers are getting smarter about consignment. They’re mining their databases of owners to find potential trades. They’re also looking at sites such as Craigslist for used vehicles.”
Since the acquisition of AAX in January, Zierden says the company is working closely with the auctions to help dealers play smarter in the upstream area (before vehicles go through the auction) to better procure used vehicles.
He predicts accessing inventory in the next two to three years will move more online, even at the dealer group level. The amount of retail and wholesale data that’s becoming available today is going to significantly reduce the days to turn.
In many cases, dealers will have the used vehicle sold before it reaches their lot.
This article republished with permission from Ward’s Dealer Business.