3 clever tactics keeping used car profits alive

Hey, everyone — The results are in…

And these are the automakers killing it in the brand loyalty department:

Most loyalty to manufacturer: General Motors
To make: Tesla
To model: Lincoln Corsair
To dealer: Subaru
Most improved: Land Rover
Highest conquest: Tesla

Gotta be honest—the Lincoln Corsair was not on my bingo card.

—CDG

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There are certain market realities no one can control (like a pandemic-induced supply shortfall). But at the retail level, dealers are pulling out all the stops to keep used car profitability afloat.

To find out more—I spoke with franchise and independent dealers across the country to see how they’ve adjusted their used car strategies for today’s market.

And I’ve distilled three key ways dealers are outsmarting the used vehicle shortage…

1. Many dealers are aggressively testing alternatives to traditional wholesale auctions. 

Wholesale auctions have been an inventory acquisition source for decades.

But there’s a problem…

Parker nails it. If we rewind to 2022—only 18% of new cars were leased. Meaning—only 2 million 3-year-old off-lease vehicles will potentially return to the wholesale used car market in 2025 — half of what the industry has grown used to, per my friends at Edmunds. 

These are some of the most desirable used cars for dealerships and they’re being sold way above market value at auction—especially when dealers are up against players with crazy deep pockets like CarMax and Carvana.

Chris Taylor, owner of Certified AutoBrokers (an independent group out of New York) told me he knew there had to be a better way to acquire used vehicles. So—he decided to build a “buy center.”

A buy center is a completely separate business under the dealership umbrella designed to strictly buy cars directly from private sellers at scale to serve as a pipeline of retail inventory. 

And for Chris, it’s been highly effective. In fact—the gross profits on retailed used cars sourced directly from Chris’ buy center are “25-50% higher” than other acquisition channels.

But it’s not an easy task. Patrick Abad, GM at Beaver Toyota, knows this first hand and spoke about the ‘buy center lessons’ he learned on a recent podcast:

1) Commission-only pay has drawbacks – Patrick started that way but realized a greater salary guarantee helps employees make smart, less panic-driven decisions.

2) Separate stock numbers make life easier – Tracking by buyer or source keeps reporting clean and organized in the dealership management system (DMS).

3) Fast payments matter – Cutting checks the same day keeps sellers happy and prevents deals from falling apart.

4) Buy center leads need their own pipeline – Mixing them with regular sales leads is risky.

5) Have a pickup plan – Once a price is set, make it easy—either schedule a drop-off or send someone to get the car.

And this reminded me of my recent podcast with Brett Sutherlin. Brett’s team appraises every service vehicle and gives customers a simple choice: fix it or sell it on the spot. They adjust offers daily and pay up to 25% over market value for high-demand models instead of chasing them at auction. Service advisors—not salespeople—make the offers, and the profits? Nearly triple what they make on auction cars, according to Brett.

Now—sourcing cars is one thing—selling them in today’s market is another…

Let’s be honest…

Payments shouldn’t be the hardest part of running a dealership.

But Corpay makes supplier payments so simple—they basically run themselves.

Save time, cut costs, and put some extra cash back in your pocket.

And here’s the fun part—we’re teaming up with Car Dealership Guy on a podcast to break down payment headaches, hidden profits, and how to keep your bottom line strong.

Keep an ear out—it’s one you won’t want to miss.

But in the meantime—ready to find out why so many dealerships call Corpay the best in the business?

2. More dealers are getting comfortable with selling cheaper cars.

The reality is—despite the average used car listing price steadily creeping down year-over-year, average prices are still meaningfully higher than in 2019 and now sit at $25,128.

But the kicker? 50% of consumers want to pay <$15,000 for their next used car. 

Sure—the profits on these sub-$15K cars might not be as high but the trick is to manage them properly.

Case in point— during my conversation with used car management advisor John Ellis earlier this week—we discussed a trend gaining traction with dealers that I used to do myself during my days on the lot.

Tiered reconditioning. Let me explain.

Many dealers treat reconditioning like a badge of honor—if a car has a dealer’s name on it—it has to be as close to flawless as possible (trust me, I get it). 

But real talk—a consumer in the market for a sub-$15K might not be as sensitive to tires that have 60% tread vs. 80% (both pass inspection!).

Instead… more dealers are trying this approach:

• $40K+ cars → Full reconditioning

  • Buyers at this level expect near-perfect conditions, so these cars still get everything.

• $20K–$40K cars → Selective reconditioning

  • If a scratch or ding doesn’t impact resale value, they leave it.

• Sub-$20K cars → The bare essentials

  • These buyers just needed a reliable, budget-friendly car. No respraying bumpers, no unnecessary parts replacements.

My POV: Sub-$15K cars are rarely the profit center—but they are the bait. In an effort to lower their monthly payments, many of these buyers end up trading down from their more expensive cars. Voila—the dealer just scored a valuable used car. 

Yes—cheaper used cars are filling a gap, but there’s an even bigger supply shift coming…

3. Used EVs are scaling fast—and some dealers are already getting ahead.

A year ago—most dealers I talked to weren’t touching used EVs. Too many unknowns, too much pricing volatility, and too many horror stories.

And now—with the likelihood of the used EV tax credit being repealed, many of the dealers messaging me who actually became bullish in the used EV space—are offloading those units as fast as possible. 

But not every dealer.

David Long, executive general manager at Hansel Auto Group told me he’s not worried at all about the tax credit going away. 

“The used side is going to be simple because the value of the car will be dictated based on the demand of the market.”

He’s got a point. The tax credit acted more like a price ceiling than a floor—dealers couldn’t sell a car for more than $25K if they wanted customers to qualify, which often erased front-end profit.

But here’s where it gets interesting:

• EV lease returns are about to explode. By 2026, EV lease returns will jump 230%, per J.D. Power. More supply = better opportunities for dealers who know what they’re doing.

• Battery health is the new Carfax. The best used EV operators are using battery diagnostics to price, recondition, and market these cars with confidence.

• Pricing could make more sense. Without the tax credit distorting the market, EVs will be valued like any other used car: by supply, demand, and condition.

Bottom line: Over the next few years, top independent and franchise dealers will likely build self-sustaining inventory networks, supplying their own lots and partner stores. While auctions will remain key IMO, dealers will keep expanding sourcing options to tighten their grip on pricing and access more supply.

***How is your dealership outsmarting the used car shortage? Hit Reply and let me know!***

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Stream now on YouTube, Spotify, or Apple. And shout out to Dealer Pay for making this episode possible!

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Three opportunities hitting the CDG Job Board right now:

• TradePending: Account Executive (remote).

• Bayway Auto Group: Service Advisor (Texas).

• FL Auto Sales Group: Marketing Assistant (Florida).

Looking to hire? Add your roles today—it’s 100% free.

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Thanks for reading. See you on the next edition…

—Car Dealership Guy

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