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1100 Burwood Highway Ferntree Gully 3156 Victoria

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Amidst Internet, A Positive Outlook for Used-Car Market

March 19, 2015 by

Used-car market

While dealers of brand new cars recently report bleaker profits, things have all been good for the used-car market. Thanks to the Internet. Anyone interested to purchase, say, a Toyota SUV can easily compare prices and get to know the breakdown of the vehicle’s cost online.

Such transparency, driven by the Internet, has been known to undermine the big players’ profits because private sellers can easily match prices and even market products that offer the same quality, minus the much heftier price tag set by the competition.

The same internet-driven transparency issues have been observed among car dealers — both in the new-car and used-car departments. But why do sellers of second hand vehicles see more profits while those offering flashy brand new ones languish?

It’s All About Smarter Dealership And Operations.

Higher Profits Despite Reduced Spread

NADA Used Car Guide analyst Larry Dixon said that since 2008, the difference between the wholesale prices paid by dealers and at auction and the retail price they offer has diminished by about $1000, bringing down the spread to just about $4,000. But does a narrowed spread necessarily mean lower profits?

Not necessarily

In fact, before the 2007-2008 recession started, gross profitability from used cars increased to about 13 percent, about two percent higher that it was before the recession. That the profits are up and the used-car market is doing good means that dealers are simply getting smarter.

To curb the growing threat of narrowed spread, used-vehicle dealers had to be more efficient in handling inventory and vehicle pricing. For example, selling the used car to buyers at prices close to what other dealers offer will leave little room for bigger discounts. This ensures greater profits, which otherwise could not have been achieved if buyers were allowed to haggle for more deals.

This move makes sense, now that price transparency, as a result of free information on the Internet, will show buyers the average price of a certain used car for sale. For example, a customer who buys a second-hand Toyota SUV may do so but could no longer demand for bigger discounts because he or she knows the average pricing online. Such smart strategy among dealers may seem very limiting, now that they can’t demand for higher price tags, but overall sales performance has been generally positive to date.

Another strategy to maximize profits making sure the second-hand car is sold within the first 20 days of purchase. Also, spending so much time for reconditioning repairs does not guarantee bigger sales. So, the pressure is on for dealers to keep the prices of used vehicles close to the market price, and at the same time market these cars to hasten the turnover period — from the time the vehicle is bought for resale until day it is finally sold to the new owner.

With these smart techniques in purchasing, handling and reselling used cars, Internet transparency can be a surprising ally, not a threat as many businesses perceive.

Filed Under: News Tagged With: Internet Price, Price Transparency, used cars, Used-Car Market

If you want a typical cars salesman that will say anything to close the deal, then please keep walking. But if you can handle a dose of straight shooting, down to earth guys, then you might get a good laugh and a damn good car too. Well worth the extra drive to get there.read more
Saint rose
Saint rose
14:34 17 Sep 17
Really helpful & freindly! Very happy with our purchase. Paul was great to deal with! Definitely recomend them!
sandi laird
sandi laird
11:16 23 Jul 17
JZ Motors provided me with top quality, genuinely helpful and friendly customer service & a quality vehicle! Thanks all! (Paul is a top bloke) Lp
Lewis P
Lewis P
05:34 21 Jul 17
Great customer service, very professional. Even after having a minor issue with our car after purchase Paul & Jeff sorted everything out for us immediately with very little fuss to make sure we were happy. Highly recommend and will make sure we refer family and friends their way.read more
Vikings Rugby
Vikings Rugby
05:40 06 Jul 17
I bought my Defender 130 from Paul and Jeff...They were bombarded with calls from the "Defender Crazies" but I was the lucky one to get it. It's 15 years old Defender so has it's issues but they sorted out Fuel Pump, Doors, new brakes, full service, light switch and a number of small items before I took delivery! The doors were still an issue but they were happy to give it another go and it was sorted, no questions asked. I've since asked for their advice on a number of improvements I've wanted to make to it and they were great at putting me in touch with local shops and arranging good prices. Thanks Guys...Let me know first when you get your hands on another Defender and thanks for all the favours!read more
Mark Fermor
Mark Fermor
08:44 19 Apr 17
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Thank you Matt for the excellent work carried out today. Many thanks Susan Tanner 😊
Susan Bursi Tanner
Susan Bursi Tanner
2018-08-14T20:15:53+0000
Tracey Simpson
Tracey Simpson
2018-02-16T08:40:36+0000
Excellent customer service. Very knowledgeable. Exceeded all expectations.
Diana Eaves
Diana Eaves
2018-02-09T23:45:21+0000
We have been burnt by a number of car dealers, but our faith has been restored with JZ Motors. Thank you for your great service, professionalism, and great cars. We will be back - and happy to referread more
Tasha Phelan
Tasha Phelan
2017-12-10T05:14:58+0000
Looked after me in a professional manor with a great price. Cheers jz
Kealan Vaughan
Kealan Vaughan
2017-11-28T10:49:40+0000
Couldnt have been more looked after by the guys. Have bought multiple cars off JZ and the boys, and have never been disapointed.
Sean Connolly
Sean Connolly
2017-11-27T11:38:11+0000
I have known Jeff for many years now and he has consistently provided quality vehicles and backs them up with an independent RACV Pre-Purchase Vehicle Inspection, ---- in fact he is an RACV Approved Dealer -- every vehicle comes with a RACV Warranty and a 7 day exchange policy ---- it is a pleasure to recommend his business to anyone looking to buy a used carread more
Carl John Fechner
Carl John Fechner
2017-05-01T01:45:41+0000
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Aria Gonzales
2014-06-17T03:35:15+0000
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2014-03-04T07:09:51+0000
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2014-02-27T05:59:40+0000
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2014-02-24T06:59:59+0000
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2014-02-12T09:57:46+0000
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2014-01-20T13:46:37+0000
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D.j. Blake
2013-09-24T22:26:18+0000
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