Pre-owned cars made up more than 80 percent of mid-New York State Sun Auto Group’s 2017 unit sales, reports WardAuto’s Alysha Webb. The group’s new car dealership, Sun Chevrolet made up a portion of that figure, but two of the group’s standalone Used Car King dealerships were responsible for most of those transactions.
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Todd Caputo, Sun Auto Group President, feels having the new-car dealership for a factor for Used Car King brand’s success.
“I was able to piggyback on the Sun name,” he told WardsAuto. “My used-car stores have always been profitable. Being able to piggyback on the new car store was one reason.”
New car dealerships have also sold used vehicles for quite sometime. A newer trend is for these dealership groups to have a standalone used-car store to increase pre-owned car sales.
While the synergy can lead to increased used car sales, some believe having the operations intersect can be risky.
“It is a completely different skill set to sell a new car and a used car,” Max Zanan, president of the consultancy Total Dealer Compliance told WardsAuto. “And it is a completely different culture.”
Caputo has been in the used car business since 2005, when he opened his first store in Cicero, NY. At that time, the used-car sales at his Cortland, NY Chevrolet store was already branded as Used Car Kin. He opened another Used Car King dealership in Cortland in 2008.
Together, the Used Car King stores sold 3,480 units in 2017 while the Chevrolet store sold 1,180 more used car along with 949 new retail units. All told, Sun Auto Group sold 5,609 new and used cars between the three stores.
Caputo used his established Chevy dealership to help open the Used Car King stores; the fact that he had it helped him purchase inventor at closed franchise auctions. He also received financing through his current bank relationships and used the same suppliers for everything from parts to health insurance.
“I call it a cluster,” Caputo told WardsAuto.
His employee team has flexibility to work at all of the stores because they’re in the same management system. Going forward, Caputo would like to expand the Used Car King brand regionally, and maybe one day nationally.
Although co-mingling new and used car stores can be a risk, the numbers say it’s worth it. According to auto auction company Manheim, there will be 39.5 million units in the 2018 used-car market, more than twice the new car sales forecast, which is around 16.7 million.
The massive surge of off-lease units could propel the used car market this this year, according to Cox Automotive research manager, industry insights Zohaib Rahi. Today’s most popular models, SUVs, CUVs and pickup trucks are expected to comprise most of those sales. This surge could make used vehicles more appealing to car shoppers who only considered new vehicles before, according to Rahi.
“If interest rates continue to rise, (and there is) any credit tightening, you will for sure see people drive into the used-vehicle market,” Rahim told WardsAuto.
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