Page 4 - MIADA-Q2 2023

How to Keep

Your Used

Vehicle Profit

Margins High

By Josh DeYoung,
Vice President of Sales,
Velocity Automotive

trap in because the rest of 2023 could be a bumpy business this year, according to an Automotive News survey
ride for auto dealers. Several factors are converging conducted in January 2023. Top strategies are accepting
to create a perfect storm of conditions that threaten less gross profit per used vehicle sold and reducing retail
used vehicle profit margins, including rising interest prices and profit targets.
Srates, waning consumer confidence, a potential
recession, falling retail prices and a tight supply of three- to While a decline in used-vehicle gross profit might be
four-year-old vehicles due to fewer leased vehicles hitting expected, it’s not inevitable for all dealers. Focusing on the
the markets. following strategies can help to keep your profit margins
higher than the market average.
However, there is some good news. Unemployment remains
low and new vehicle prices remain high, which means that SMART ACQUISITION STRATEGY
plenty of car shoppers will qualify for financing and will opt
for used vehicles. Demand should remain stable throughout Being smart about how much you pay for inventory is
the year. essential. Pay too much, and the potential for profit sinks;
offer too little, and you send the trade somewhere else.
Regardless of market conditions, 75 percent of auto dealers Most dealers rely on inventory management software as a
are placing a greater emphasis on their used-vehicle guide for how much to pay for used vehicles. However, this

4 | MSIAD A MISSISSIPPI DEALER Q2 2023
4 | MSIADA MISSISSIPPI DEALER Q2 2023