The Growing Used Vehicle Market May Be Great for Consumers

According to a recent article in Automotive News, investors and car dealers have shifted their focus to the used-car space because dealers have more pricing and profit controls; something the digital retailing space is forced to focus on. With profit margins plummeting and new car sales expected to decrease, many are eyeing the pre-owned market. The financing firm Ally recently extended their deal with Carvana to provide up to $2.3 billion in financing while AutoNation invested $50 million in online used-car retailer Vroom!

 

Investors only put money into companies they believe will grow, bringing them a return on investment. That’s common sense. The fact that this is all happening with a focus on used cars – whether those are bought from an industry disrupter or a franchise dealership – speaks volumes. This shift in focus to used cars may be because of increased profit margins for these companies. But assuming this comes to pass, the biggest winners will be consumers. Why? Because as the volume of used car sales increases, legislators will be forced to shift their recall focus to used vehicles – the one area where dealers can still sell vehicles without fixing recalls.

 

And, when that happens, consumers will demand that legislators enforce many of the same laws which govern the sale of new vehicles with open recalls. Some say the fuse is already lit and it’s just a matter of time.

 

While it’s easy to see why legislators were comfortable banning the sale of new cars with open safety recalls (the selling dealership can repair them on their own), dealers with off-brands don’t have the same capability. They are forced to take their units to what could be a competitor for repairs and, perhaps, get pushed to the bottom of the list. Some industry pundits predict that dealerships will give priority to regular customers over competing dealers needing recall repairs.

 

Recall legislation will continue to protect new car consumers. However, it is in the consumer’s best interest for legislators to extend similar protections to buyers of used cars. As current trends suggest that the pre-owned market will soon make up a larger portion of overall vehicle sales, it’s easy to see the impending crisis for consumers, the industry and the government. If the purpose of legislation is to keep consumers safe (which is presumably why recall laws exist when it comes to new cars), then the same logic should apply to used car sales.

 

While I can understand how this could put a burden on dealers, there are ways to manage inventory efficiently without sacrificing consumer safety. Vehicles acquired via a trade-in or at auction can be checked for open recalls, with appropriate valuations to offset the burden of repairing the recall. Those acquired from auctions can be checked for open recalls prior to placing bids.

 

As the used car market continues to expand, our industry should consider the impact the practice of allowing unrepaired vehicles with safety recalls will have on consumer safety. As well as the potential legal liability presented by selling faulty products, along with the resultant damage to the integrity of the brand. Some dealers already refuse to sell vehicles with open safety recalls. It’s a mountain we can climb if, as an industry, we choose to do it together.

Views: 70

Comment

You need to be a member of DealerELITE.net to add comments!

Join DealerELITE.net

Comment by Pat Kirley on December 29, 2018 at 5:25pm
The pre owned market certainly has lots of advantages these days.

Latest Activity

John Sternal posted a blog post

Auto Dealerships See Avg. 20% Rise in Profits Under DOWC

According to Protective Asset Protection, it is estimated that auto dealers leveraging a…See More
2 hours ago
Black Book posted a blog post

Depreciation Rates Improve

Welcome to this week's edition of Black Book Market Insights, with in-depth analysis of used car…See More
4 hours ago
Jim Flint posted a video

Website Taxes

Are you paying "tax" on your website to Google? CEO & Founder of Local Search Group Jim Flint explains in this video blog.
5 hours ago
Damian Boudreaux posted a blog post
5 hours ago
Simon Hopes posted a blog post

Getting Your Car Restored to Its Original Shine

Some of us may have had all good intentions of looking after our car when we first bought it. We…See More
8 hours ago
Profile Icon via Twitter
RT @Haydenfilms: Don't waste time on wasting time. Get your copy of #TheoryOfFive, written by our longtime friend and colleague, Mr. Chris…
Twitter16 hours ago · Reply · Retweet
Profile Icon via Twitter
Checking out "Bobby Compton ~ Motivational Listener" on @dealerELITE: https://t.co/wi33cjLTpz
Twitter23 hours ago · Reply · Retweet
Profile Icon via Twitter
Twitteryesterday · Reply · Retweet
Bobby posted a video

Bobby Compton ~ Motivational Listener

Moreover, look for able men from all the people, men who are trustworthy and hate a bribe, and place such men over the people as chiefs of thousands, of hund...
yesterday
Bill Wittenmyer posted a video

Witt's Wise Words: Super Workers vs Supervisors

Bill Wittenmyer shares the difference between super workers and supervisors in this week's episode of Witt's Wise Words. To read the full article, click here...
yesterday
Scot Eisenfelder's blog post was featured
yesterday
Daniel Ross posted a blog post

Males's Socks - Picking Design and Comfort

The most fundamental of all men's devices, and the one utilized for convenience as well as style is…See More
yesterday
Samuel posted a blog post

Free Alternatives to Adobe Photoshop

Photoshop is an impressive piece of software, but it comes with quite a high price. If you're an…See More
Saturday
Profile Icon via Twitter
RT @Automotive_News: Twitter appoints Google's Guy Schueller as new industry director of automotive https://t.co/fLE01oyHSE https://t.co/CZ
TwitterSaturday · Reply · Retweet
Profile Icon via Twitter
RT @Automotive_News: GM confirms Buick Cascada dead after 2019 model https://t.co/MM58g7AX7K https://t.co/bL6Soqdcsq
TwitterSaturday · Reply · Retweet
Profile Icon via Twitter
RT @ChrisBSaraceno: Another Awesome Leadership Article by @DaveAnderson100 A must reader for ALL leaders https://t.co/OSv0KXyEp7
TwitterSaturday · Reply · Retweet
Profile Icon via Twitter
TwitterSaturday · Reply · Retweet
Profile Icon via Twitter
RT @ChrisBSaraceno: My Friend John Waring Ready for his TheoryOf5 Journey #winning #believe #autotrader #prosperity #success #family #marr
TwitterSaturday · Reply · Retweet
Profile Icon via Twitter
RT @womendrivers: Half of women who are shopping for a new car are going to 3 dealers - almost 2X's the industry average. Is your #dealersh
TwitterSaturday · Reply · Retweet
Profile Icon via Twitter
RT @Cliff_Banks: In the auto industry? Time to start paying attention to analyst @DRuizG80 -- intriguing insights with a fresh perspective.
TwitterSaturday · Reply · Retweet

Get Newsletter

© 2019   Created by DealerELITE.   Powered by

Badges  |  Report an Issue  |  Terms of Service