Lithia Motors Inc. wants to improve its used-vehicle sales in 2025 after the group’s volume declined last year.
“We are confident in our ability to strengthen our opportunity areas, particularly used-vehicle sales,” Lithia COO Adam Chamberlain said on an earnings call Feb. 12. “Used autos continue to be the focus of our operations. And whilst we’re encouraged by our progress, we expect to see significant improvement in the quarters ahead.”
Lithia’s same-store used-vehicle sales fell 4.3 percent to 74,407 during the fourth quarter and 4 percent to 306,408 for the full year — even though same-store new-vehicle sales were up 7.4 percent for the quarter and 2.3 percent for the year.
CEO Bryan DeBoer said on the Feb. 12 call Lithia “did a solid job” on new vehicles during the fourth quarter. “But that gives indication that there was a market there that we did not capture on used cars,” he said.
Because 55 percent of Lithia’s used-vehicle inventory comes from trade-ins “there’s no logic trail to say why we should be different on used,” Chamberlain said.
Lithia has a “significant focus on driving used in 2025,” he said.
DeBoer called it “highly likely” Lithia could produce double-digit percentage growth in same-store used-vehicle sales “in the coming years.”
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Lithia’s used-vehicle gross profit per vehicle might also improve slightly over time and help the group’s used-vehicle results.
On a same-store basis, Lithia averaged $1,959 in gross profit per used vehicle during the fourth quarter, down 0.9 percent from a year earlier, and $2,084 per used vehicle for the year, down 6 percent. These declines were far smaller than the more than 20 percent drops seen in same-store new-vehicle gross profit per vehicle for the quarter and year.
Lithia anticipates producing an average front-end same-store gross profit of $1,800 to $2,300 per used vehicle in 2025 while generating an average overall gross profit — a figure incorporating both new- and used-vehicle sales and finance and insurance results — of $4,100 to $4,300 per vehicle.
DeBoer said Lithia expects used-vehicle gross profit over the long term would settle at $200 to $400 higher than today and help lead to an overall gross profit per vehicle in the $4,200 to $4,500 range. It was unclear if these estimates involved same-store or companywide figures.
“We believe that we’ve already [reached the low point] on used and there’s a lot of upside on used-vehicle GPU that should come back over time,” he said.
Lithia, of Medford, Ore., ranks No. 1 on Automotive News’ list of the top 150 dealership groups based in the U.S., with retail sales of 369,913 new vehicles in 2024.
