Auto sales keep economy rolling
July 11, 2012
Classes help younger set prepare for driving
July 11, 2012
As the stock of wholesale pre-owned cars continues to decline nationwide, causing price hikes on retailers and consumers, one local salesman is trying to offset the business crunch with alternative techniques.
Ryan Avet has sold cars for the past 13 years and joined Barker Honda two years ago as the dealership’s used-car manager. Because traditional wholesale venues are providing fewer automobiles at higher prices, Avet has pursued other avenues, such as buying cars from “people on the street” and procuring high-end vehicles that aren’t typically available in this region.
“It is kind of unique, because a lot of people won’t do it because it is hard,” Avet said. “It takes a little more time to do it, because you have to go through so many different outsources to do it. It’s not easy.”
Avet uses word of mouth, classified ads and online marketplaces to locate cars. He’s not opposed to buying from an individual seller, and a foray into the Lexus marketplace has proven fruitful, he said.
Barker Honda sold a Lexus sedan to an out-of-state buyer last month, Avet said. Cars.com lists a 2010 Lexus IS 250 held by the dealership at $30,972, and Avet said he’s closing the deal with another non-local buyer.
The exotic nature of the vehicles isn’t limited to Houma, he said, and customers are willing to pay premium prices for the higher-end automobiles.
“There’s not as much competition, not as much of a headache,” Avet said. “It makes it a little easier to sell them closer to home without the whole battle.”
Barker Honda’s pre-owned sales are down by about 20 percent and 15 percent year to date in terms of units sold from 2011 and 2010, respectively, Avet said. His inventory has also dropped 16.7 percent, from 120 to 100.
Used-car business has fluctuated wildly and unpredictably over the last decade, the sales manager said. It intensified during the recession and worsened when the federal “Cash For Clunkers” program removed nearly 700,000 vehicles from the national market. Then, dealers in the Southeast had to cope with the loss of flooded vehicles infiltrating the market, if they weren’t removed altogether.
“It’s been very unpredictable for a long time,” Avet said of the pre-owned vehicle market. “You name it – everything has been against us. When you get back on your feet, something else happens.”
The National Automobile Dealers Association estimated that the supply of used vehicles up to 5-years-old was 17 percent lower in 2011 than 2008. Compact vehicle supply actually increased over that time, according to a NADA report, but every other vehicle type decreased, peaking with a 40-plus percent drop in available large SUVs.
The short supply helped cause a 15 percent spike in used-car retail prices over that time, according to the report.
Jonathan Banks, executive automotive analyst for the NADA Used Car Guide, regularly blogs about the industry.
Included in Banks’ posts are numbers collated and released by AuctionNet through a partnership with NADA. AuctionNet collects 140,000 to 200,000 raw auction transactions each week from more than 150 auctions nationwide.
Nationally, the wholesale cost of all used cars up to 5 years in age decreased by 1.5 percent from June 2011 to June 2012, according Banks’ latest post. Over that time, mid-size cars saw the biggest drop at 5.2 percent. Mid-size utilities, large pickups, large SUVs and luxury utilities increased over that time.
NADA predicts the volume of used wholesale cars will continue to decline “well into 2013 before starting to pick back up again,” according to Banks.
NADA reports that new car sales didn’t begin to rebound from the national recession until 2009 and that the supply of late-model units won’t do the same until the third quarter of next year.
Used-car availability is inextricably linked with new vehicle sales and lease originations. New and leased cars are not released back into the market for a few years after they are purchased, and that gap has widened with more people holding onto their cars longer because of finances, according to Banks.
Although luxury vehicles provide some relief for Barker Honda, they aren’t exempt from national woes.
The supply of luxury used vehicles up to 5-years-old will decline by 13 percent this year compared to 2011, which will result in an average price increase of 1.9 percent, according to recent NADA projections. The prices increased 9 percent in 2011, NADA said.
Ryan Avet, used-car manager at Barker Honda, showcases his stock of pre-owned vehicles. Avet has responded to a shallow used-car market with alternative techniques, such as buying from individual sellers.
