2019 Dealer Research Study Results: Focus on Trade-ins, Pre-owned Sales

January 25, 2019

Dealer Research Uncovers Missing Profit Opportunities With Trade-ins, Pre-owned Vehicles

Survey findings highlight need for dealers to modify focus to maximize profits

CHICAGO — January 25, 2019 — MAXDigital, a premium end-to-end software provider for automotive dealers, released its third annual dealer research study on the subject of profitability and sales processes. In conjunction with Erickson Research, MAXDigital surveyed more than 430 dealers across the United States in late 2018.

Key findings from the research include:

  • New car profits are shrinking. 60% of dealers in the study reported new car profits were down the past 2 years, by an average of $170 per vehicle.  
  • Used cars are more profitable. Dealers reported higher profits on used vehicles compared to new. This is consistent with current National Auto Dealer Association  (NADA) trends.
  • Used car vs. new car median profit: $1,500 – $1,999 compared to $500 – $999, respectively.
  • Trade-ins are currently an untapped profit source. Just 15% of dealers said the trade-in was a top profit source. And less than half of dealers are under allowing on the trade-in, with an average of just $250 per vehicle.
  • Dealers are discounting their profits away. 65% of dealers said they negotiate more than $500 off the listed vehicle price. This is up 9% from MAXDigital’s 2017 study.
  • Dealers are ready for sales process change. 45% of dealers said they are looking to change their sales process, with the majority wanting to adopt a consultative approach. Integrating technology was also a major priority.
  • Sales training will help profits. Dealers said regular training for sales staff was the biggest opportunity to increase profitability. 7 in 10 dealers said their salespeople have told them they don’t have enough training or information.

“It’s tougher than ever to capture gross profits in today’s market, but this study shows that profits can be made by looking in the right places: Trade-ins and Pre-owned,” said MAXDigital’s Executive Vice President Mike Cavanaugh. “To capture more gross, dealers need to treat trade-ins with the same level of importance as the front- and back-end, and make preowned a priority.”

More than 430 U.S. dealers completed the survey online in November 2018. Respondents included General Managers, Dealer Principals, Used Car Managers, Owners, and Internet Managers.

Access the full report findings, including an infographic, here:

About MAXDigital

MAXDigital provides cloud-based software and mobile applications to the automotive industry. As the industry’s premium end-to-end software solution for automotive dealers, MAXDigital empowers thousands of dealerships across the U.S. to manage inventory, increase gross profits and sell more cars through digital retailing.

Founded in 2011, the MAXDigital suite of products includes FirstLook, an inventory management platform, MAX Ad®, a best-in-class content generation and distribution system, MAX for Website®, a vehicle value and content creator for dealer websites, MAX Digital Showroom®, a real-time sales tool for desktop and mobile that builds trust and transparency with customers, and MAX Path to Purchase™, an innovative software that removes hassle for customers and provides a streamlined car shopping process.

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