Used Car Dealers
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 23,700 used car dealers in the US sell pre-owned vehicles purchased from the general public and other sources. Unlike new car dealers, used car dealers generate little revenue from maintenance and repair services. Most firms outsource service agreements to a third party.
High Cost of Inventory
The used car dealer industry is capital intensive with most firms requiring outside funding to build inventory, which accounts for 55-59% of total assets.
Shift to Digital
The COVID pandemic accelerated the shift to digital transactions in the used vehicle dealer industry.
Industry size & Structure
The average used car dealer operates out of a single location, employs 6-7 workers, and generates $7.2 million annually.
- The used car dealer industry consists of over 23,700 firms that employ 183,600 workers and generate $169.5 billion annually.
- The industry is concentrated at the top and fragmented at the bottom; the top four companies account for about 20% of industry revenue.
- Large firms include CarMax, DriveTime, and America’s Car-Mart. AutoNation and Penske Automotive Group also have used car dealerships.
Industry Forecast
Used Car Dealers Industry Growth
Recent Developments
Nov 21, 2024 - Used Car Prices, Employment Down
- Consumer prices for used cars and trucks fell 3.4% in October 2024 compared to a year ago and were up 0.4% from the previous month, according to the Consumer Price Index by the US Bureau of Labor Statistics. Employment by used car dealers declined 2.2% in September 2024 year over year, while average wages for nonsupervisory employees grew 3.9% during the same period, reaching $25.05 per hour. Producer inflation for used vehicle dealers fell nearly 14% in September 2024 compared to a year ago, according to producer price data from the US Bureau of Labor Statistics. Producer prices are still 7% higher than before the COVID-19 pandemic after spiking due to supply problems resulting from pandemic challenges. Used car dealer sales fell 2.7% in July 2024 compared to a year ago and rose 5.4% from the previous month, according to the Census Bureau.
- US auto production costs could increase by $40 billion due to president-elect Donald Trump’s plans for 10-20% tariffs on all imports and additional tariffs of up to 60% on Chinese goods, according to a report in Nikkei Asia. The increased tariffs, which would apply to finished cars and auto parts, could have a major impact on the auto industry, which has sales of 15 million vehicles per year. Many of the vehicles are imported from Mexico, Canada, and Japan. Mexico accounted for over 40% of auto parts imported into the US in the first half of 2024. According to calculations by consulting firm AlixPartners, higher tariffs on imported parts could increase the manufacturing cost per US-made car by up to $4,000. It is expected that the tariffs would lead automakers to increase production in the US. While research nonprofit organization Tax Foundation estimates the tariffs could increase US revenue by $3.8 trillion in the long term, it is anticipated that companies will cover the higher costs by raising prices, per the report.
- According to an analysis by Cox Automotive of vAuto Live Market View data, retail used-vehicle sales reached 1.4 million vehicles in October 2024 , a 7% increase from the previous month. Year over year, retail used-vehicle sales were up 12% in October 2024. According to Cox Automotive’s Scott Vanner, “Estimated retail sales for used vehicles surged in October, delivering the best volume result in the past three years.” The days’ supply of used vehicles fell to 45 days at the end of October 2024 from 48 days in September 2024. The certified pre-owned segment outperformed the overall used market with a double-digit increase.
- A new study by iSeeCars shows that consumers are increasingly turning to older used cars to try to keep their costs down. According to the study, the market share of used cars 10 years or older has grown by 30% since 2014. The popularity of older cars is also driving up prices, with the average price of an older car increasing over 60% from $7,583 in 2014 to $12,194 in 2024. According to the study, older sedans, wagons, and hatchbacks account for 16 of the 20 cars with the highest growth in older car market share. The study examined 169 million used car sales from the period of January 2014 to June 2024.
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