“Most dealerships typically live off of the trade-in, which is not really defined or proactive,” Lithia CEO Bryan DeBoer said. “Whereas now, you’re going to get so many vehicles that you can pick and choose the vehicles that are going to have the best margin and going to turn the quickest and be able to meet our customers’ needs at the highest levels.”
Lithia’s average gross profit on the used vehicles it retailed in the third quarter was $2,258, up 4 percent from the prior-year period. It is also nearly $200 more than average gross profit on new vehicles. Sales of what Lithia calls value vehicles, or used vehicles 8 years old or older, rose 19 percent in the third quarter. Gross margins on those older vehicles, DeBoer said, are almost 20 percent.
“That’s really being driven on our ability to procure cars,” DeBoer said.
Private-party sales remain a huge sourcing opportunity, and DeBoer is betting that Lithia — the nation’s third-largest new-vehicle retailer — has both the…
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