The used car market is facing a unique set of challenges right now—from the impact of Hurricane Helene to an influx of lease returns and ongoing affordability concerns. Joining us on the latest episode of CBT Now is David Simches, Group Used Car Director for Crown Auto Group, who will shed light on these current challenges and offer insight into how dealerships can stay ahead of the curve.
Key Takeaways
1. The used car market continues to face significant inventory shortages, a long-standing issue for dealers. Simches notes that regardless of external factors like economic shifts or seasonal changes, the persistent need for more vehicles is a common refrain among used car managers. This ongoing challenge impacts sales strategies, pricing, and overall dealership performance, emphasizing the critical need for effective sourcing and inventory management.
2. Despite the inventory challenges, Simches emphasizes that Crown Auto Group’s used car business remains strong. He reports successful sales and the ability to maintain healthy margins. This suggests that effective management practices—like controlling inventory aging—can lead to profitability even in a fluctuating market.
3. Additionally, Simches highlights the broader economic influences affecting the used car market, including recent hurricanes and port strikes. He points out that while used car prices have been experiencing record depreciation, these external events can create short-term fluctuations in demand and pricing. For example, he anticipates a potential price spike as the market reacts to supply chain disruptions caused by the hurricane. Understanding these dynamics is crucial for dealers to make informed pricing and inventory decisions.
4. Moreover, Simches shares insights into the growing interest in used EVs, which are becoming increasingly popular among consumers. He mentions that Crown Auto Group actively seeks to buy EVs and that they sell quickly, indicating a shift in consumer preferences. He also notes that these vehicles are perceived as more reliable due to their lack of traditional engines, presenting a lower risk for high-mileage cars.
5. Looking ahead to the last quarter of 2024, Simches expresses a positive outlook for Crown Auto Group, suggesting that the demand built up due to recent disruptions will lead to strong sales. He mentions specific geographic considerations, such as their hubs in Florida being affected by hurricanes, which could lead to increased demand for used vehicles. Simches’ perspective underscores the importance of remaining optimistic and prepared for market fluctuations while recognizing the potential for growth amidst challenges.
"Even with the challenges, we've been chugging along, and I really have an overall positive kind of view for the last quarter. There’s going to be some built-up extra demand for us." - David Simches
