Lithia Motors Inc. is targeting to sell an average of 75 used vehicles per store monthly in the next few years, chief executive Bryan DeBoer told Automotive News. The company will focus on people, property and processes to achieve that sales level, which in the third quarter was at an average of 57 used vehicles per store monthly.
DeBoer remarked that to increase their used-car sales, there is a need to boost their ability to find used cars, dubbed as "hard lifting." Lithia, which has 92 stores positioned mostly in the Pacific Northwest and California, is adding more employees to boost its hard-lifting ability.
In the past 12 to 18 months, Lithia has added more than a dozen used-car operations positions, mainly used-car managers. Lithia likewise is expanding some dealerships to allow them to stock more used vehicles, DeBoer remarked.
The company is also being more creative in finding used cars to sell. DeBoer remarked that the primary agenda in Lithia's recent manager meetings has been on "used-car development and consumer behavior, and how do we capture it." He said that the used-car business accounts for more than half of the potential profits of their stores, adding that in some dealerships, used cars are a third of fixed ops profits.
The company posted a 17-percent surge in used-vehicle retail sales in the third quarter of 2013 to 15,496. The average gross profit per retail used vehicle sold surged 7 percent to $2,687. Lithia's retail used-vehicle sales in the period amounted to a 15 percent gross-profit margin, compared with 6 percent for new-vehicle sales.