Selling used vehicles is good business for new car dealers, a recent report suggested. Not only do they make more money selling used vehicles but they’re also looking to draw the buyer back to their own bays for future service.
In an effort to be price-competitive, dealers will look to the aftermarket to supply them with parts, according to a recent report from Lang Marketing.
New vehicles sales are low. With interest rates high and new prices elevated, the used market has seen heavy demand. Used values, according to Canadian Black Book, used values are about 60 per cent higher than its benchmark.
“Many dealers are increasing used vehicle sales by offering access to their bays to incentivize customers to buy used vehicles from them,” reported Lang in a recent Aftermarket iReport.
“This is an important step in the reciprocal dynamics that dealers are developing between their bays and used vehicles.”
With the reduction of vehicles under five years old, dealers are turning their attention to what is typically the aftermarket sweet spot.
“Dealers provide extended service hours, quick service lanes and discounts as incentives for used vehicle buyers to return for future repairs,” Lang said in its report Dealer Used Vehicle Sales Impact DIFM Market. “In addition, many dealers are bundling used vehicle sales with maintenance contracts to boost service bay volume.”
As some dealers will sell brands other than their own, they’re accepting other brands into their dealership repair bays. “Accordingly, the mix of nameplates repaired in dealer bays will expand due to their used-vehicle business,” Lang said.
And to compete with price against independent repair shops, dealers are sourcing non-OE aftermarket parts.
“Aftermarket brands enable dealers to provide competitive repair pricing for older vehicles and the variety of nameplates passing through their service bays, making dealers more competitive with Independent repair outlets,” Lang observed.
For parts suppliers, this is a win-win, Lang noted. The aftermarket will expand its customer base.
“The promotion of used vehicle sales by dealers provides them with multiple benefits and allows the independent aftermarket to supply more parts to dealers,” Lang said.
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