The newest dealer survey from KeyBanc Capital Market showed the opening month of 2018 was a fruitful one for dealerships’ used-vehicle departments.
According to the results shared Friday, the majority of respondents — 75 percent to be exact — continued to report increasing used-vehicle sales in January.
“We are anticipating a low single-digit used-car volume increase in 2018, driven by positive unemployment trends and continued improvement in off-lease supply,” KeyBanc analysts said.
And closely tied to used vehicles, the survey highlighted that dealerships are enjoying a robust start within their service drives, too.
The survey again showed the majority of respondents — this time 69 percent — continued to report increasing parts and service revenue, maintaining a positive trend in this segment.
“We maintained our low to mid-single-digit P&S revenue growth outlook into 2018, in line with the 2017 trend driven by increasing zero to 7-year-old vehicles, increasing used-vehicle sales that drives reconditioning work into bays and favorable warranty trends,” analysts said.
KeyBanc noted that positive used vehicle and P&S revenue trends should offset a “modest” 0.8 percent year-over-year pullback in new-vehicle sales volume.
“We are maintaining our full-year 2018 outlook of a 2 percent, or 16.8 million vehicles, in line with the midpoint of consensus SAAR range of 16.5 million to 17.0 million units,” analysts said.
No matter whether the stores are turning used vehicles or new models, the KeyBanc report pointed out that overall auto financing and subprime financing availability continued to contract slightly. Analysts added the trend “is not unusual at peak of the cycle, but credit availability remains well aligned with demand.”
And when it comes to gross profit, the KeyBanc survey showed a mix bag of trends.
When it comes to F&I gross profit, 46 percent of survey respondents reported intact gross per unit while another 38 percent reported an increase of about $50 year-over-year.
For gross on used vehicles, about the same number of responding dealers posted a rise of least $50 per unit in January as the ones that sustained a drop of about $50 per unit to open 2018.