Used Car Dealers in the US Industry Market Research Report from IBISWorld Has Been Updated

Like most automotive industries, the Used Car Dealers industry felt the impact of the recession and the dramatic slowdown in consumer spending; however, over the five years to 2019, adoption of "lease here, buy here" financing options will help used car dealers stay competitive and increase profitability, even though the effects of new legislation on financing practices will remain uncertain. For these reasons, industry research firm IBISWorld has updated a report on the Used Car Dealers industry in its growing industry report collection.

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Economic stability is forecast to drive the sales of big-ticket items like cars.

New York, NY (PRWEB) February 25, 2014

In the five years to 2014, the Used Car Dealers industry endured volatile swings in revenue. Because the industry relies strongly on consumers to drive revenue growth, fluctuations in disposable income dictate the direction of the industry. Therefore, when disposable income plummeted in the midst of the recession, industry revenue followed suit. Additionally, turmoil in the market for asset-backed securities eroded the balance sheets of auto financiers, triggering tightening of credit standards. With tighter credit standards, consumers found it difficult to finance a vehicle, hampering Used Car Dealers industry demand.

Nevertheless, disposable income rebounded in the latter part of the five-year period, along with looser credit standards. As a result, industry revenue is expected to increase at an annualized rate of 3.5% to $101.3 billion in the five years to 2014, lifted by a 1.6% increase in 2014 alone. Moreover, due to a shortage of used cars, selling prices are rising, thus benefiting profit margins for industry operators.

According to IBISWorld Industry Analyst Brandon Ruiz, "Used car dealers benefited from offering independent financing solutions during the downturn." While new car dealers rely on financing companies to fund consumers' purchases, used car dealers often offer in-house financing known as "buy here, pay here" (BHPH). Traditionally, customers who purchase vehicles on a BHPH basis have C- and D-grade credit ratings. Even customers with B-grade credit had difficulty finding affordable financing during the credit crisis. These customers often purchased vehicles from used car dealers on a BHPH basis rather than opting for traditional financing from new car dealers.

"The recession greatly reduced consumers' ability to purchase vehicles," says Ruiz. Unemployment and asset price declines, including for homes and stocks, cut into consumers' incomes and savings. Consumers with poor credit (a large portion of industry customers) have been among the worst hit. Consumers with D-grade credit spent $11.0 billion at used car dealerships in 2009, a 51.7% decline from 2008. Fortunately, relative economic stability is encouraging spending on used cars. For example, used car sales are expected to grow to 41.5 million vehicles in 2014, up 1.5% from 2013. The US economy will begin growing strongly again in 2014, and because car sales typically move with the business cycle, car sales are expected to follow suit.

For more information, visit IBISWorld’s Used Car Dealers in the US industry report page.

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IBISWorld industry Report Key Topics

The Used Car Dealers industry sells used passenger vehicles, including passenger cars, light trucks, sports utility vehicles (SUVs) and passenger vans. Used car dealers also provide financing and insurance services.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld Inc.

Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.


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