If you are running or looking to open a used car dealership, one big question is what types of vehicles should be focused on? The goal is to have consistent demanded categories so that things don't sit in inventory forever. You need good sales, but you also need good product. Let's look at some types as well as inventory strategies.
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There is no one-size-fits-all answer to this question as the most consistently profitable types of used vehicles to sell as a dealership can vary depending on several factors, including geographic location, market demand, and current trends. However, some types of used vehicles that generally have good profit margins for dealerships include:
- Trucks: Pickup trucks and commercial trucks tend to have higher resale values than most other vehicles due to their utility and durability.
- SUVs and Crossovers: These vehicles are often popular with families due to their spaciousness and versatility, which can make them more desirable and valuable in the used car market.
- Luxury Vehicles: High-end luxury cars and SUVs tend to have a higher profit margin due to their initial high cost and exclusivity, making them appealing to a specific niche market of buyers. Know your local market before diving deeper here.
- Sports Cars: Collectible or high-performance sports cars often have a strong resale value due to their rarity and desirability among enthusiasts.
- Low-Mileage Vehicles: Vehicles with low mileage are typically in better condition and have a higher resale value, as they are perceived as being less prone to breakdowns or costly repairs.
In general, the most consistently profitable types of used vehicles to sell as a dealership will depend on the specific inventory mix, location, and target market of the dealership.
As far as general inventory planning and strategy, it is good to try and match up the level of inventory with the level of demand. If you have a product that will sell 100x a month, you probably want to make sure there are always 10 to 20 vehicles on the lot at all times, but if you sell something once every few months, then just having 2 may be fine.
You will get a general sense of how much vehicle inventory is needed by looking at seasonality trends and overall market trends.
Article found in General Industry.
