Serves the Commercial Small Fleet Market of 10 – 50 Vehicles

Manheim: Used-Vehicles to Remain Profitable

October 25, 2007

Provided retail auto financing remains readily available, franchise and independent dealers should be able to remain competitive and profitable in the used-vehicle sales market for the final quarter of the year, according to Manheim's chief economist Tom Webb, Auto Remarketing<.i> reports. Wholesale used-vehicle prices, according to Webb, showed their "normal, large seasonal" decline in September, but on a mix, mileage and seasonally adjusted basis, prices rose 0.6 percent for the month. As a result, Webb said the Manheim used-vehicle value index reading registered 115.8 for September, representing a 3.5 percent increase over 2006. “There is no doubt, however, that dealer margins are under pressure and that incremental sales gains are becoming increasingly difficult to obtain,” Webb says. “But, if retail auto financing remains readily available then used sales should continue to offer numerous profit opportunities."Webb said he could not project how final used-car volumes will turn out by year's end, but he said that contrary to some reports, franchise dealers should show a "modest" increase in used-vehicle retail sales for 2007, whereas sales by independent dealerships may be "flat to slightly down" for the year. According to Auto Remarketing<.i>, Webb labeled the third quarter as "tumultuous" with respect to the financial markets, but said the Federal Reserve moved quickly and correctly by enacting significant cuts in the discount rate in August and September.
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