With this morning’s release of Penske’s second quarter 2014 earnings, we are able to update our graph depicting the year-over-year percent change in sales-weighted same-store used unit retail sales growth for the seven publicly-traded dealership groups. The second quarter of 2014 marked their 20th consecutive increase. The 3% increase during the quarter was the second smallest recorded during the past five years. But, as the string of consecutive gains lengthens, the year-over-year comps naturally represent an increasingly high hurdle.
With the aid of acquisitions, total used unit retail volumes for the seven groups increased 8% in the quarter and 9% for the first half of the year.
Although gross margins continue to narrow on a year-over-year basis, the decline was small and more than offset by higher throughput, strong F&I income, increased operating efficiencies, and higher average transaction prices.
As we have noted in explaining the strength in wholesale pricing this year, the retail used vehicle environment is stronger than suggested by nationally reported unit sales. Last quarter’s earnings reports confirm that. Our conversations with the large privately-held dealerships groups indicate they did as well as – if not better – than the seven publicly-traded ones. And, most importantly, small independent used car dealers have been able secure and grow their niche in many markets.