First Coast used-car dealerships bullish on 2020

With a looming wave of off-lease vehicles poised to come back on the market, some auto industry experts expected decreased profitability for those dealers in the used-car market in 2019.

Luckily, the worst-case scenario didn’t materialize as demand has kept up with supply nationally. And, in Jacksonville, two well-established used-car dealers came away from last year happy and looking forward to a new and profitable 2020.

“It’s a cyclical thing that goes up and down,” said Vaughn Motorgroup General Manager Dan King. “As people buy more new cars, leasing becomes more attractive and offers consumers a better deal when the used cars aren’t out there. Then, a couple of years after that, when the those leased cars come back on the market, the used-car prices are more competitive. So, we’ve gone through that ebb and flow where used-car prices are very good right now.”

Vaughn Motorgroup, located on San Jose Boulevard in Mandarin, specializes in late-model, “super-low mileage” sports cars and luxury cars — a high-end niche among used-car sellers. King says the 21-year-old company, formerly known as Richard’s Car Company and located on Beach Boulevard, has done well since moving to the Mandarin location five years ago.

“It’s the only store of its type in the area, and many of our buyers live in and around the Mandarin area, but we do have some drive in from further out because of the type of vehicles we sell,” King said.

King says the hottest vehicles on his lot and showroom in 2019 included Chevrolet Corvettes and Porsches, “fun-to-drive” sedans and some “high-end SUVs from time to time. And, convertibles continue to be popular at Vaughn Motorgroup, which has about 100 vehicles on the lot at any given time.

King says sales at Vaughn Motorgroup were strong in 2019, and he expects them to remain at the same levels in 2020.

“Business has been good for several years and we expect it to stay the same, especially because the economy is good,” King said. “Also, we’ve been serving Jacksonville for so long and many of our people are very experienced, we take pride in dealing with our folks. So, we have a ton of repeat business, and we really enjoy taking care of the customers we have.”

King has good reason to be bullish on 2020. According to the National Automobile Dealers Association’s dealership financial profile, the average used-vehicle selling price has been rising — going up to $20,835 through June of 2019 (for franchised dealers), compared with $20,390 during the same time in 2018. When it came to new cars, the same profile showed the average selling price of a new vehicle was $36,402 in the first half of 2019, compared with $35,249 in the first six months of 2018.

The NADA snapshot also found that while average prices for new and used vehicles have both been rising, dealers are doing better on the used side of the business.

“As far as I’m concerned, used is red hot,’’ said Andrew Stowe, senior director of vehicle valuations at J.D. Power, during November’s Used Car Week in Las Vegas. ”This is where you want to be.’’

At World Imports USA, located on Beach Boulevard near the Interstate 295 East Beltway, General Manager and Vice President Jake Sydorowicz says his sales were “equal to or a little bit better” over 2018, largely a result of consumer confidence in the economy.

“Everybody seems to be in a good place this year financially and economically,” he said. “There are lots of grades and types of used cars out there. For example, you can buy banged-up used cars, higher-mileage cars, but if you shoot for top-shelf used cars like we carry — low-mileage, well-kept cars with a good maintenance history available at a premium price — there’s always a market for those types of vehicles.”

Sydorowicz says World Imports USA’s main concentration is the European imports such as Audi BMW, Mercedes-Benz, Volkswagen and Volvo, along with specialty cars like Mustang Shelbys, Chevy SSRs and special Corvette models. The dealership, established in 1986, usually has between 125 and 150 cars on the lot at any given time.

“We always try to have the best on our lot,” Sydorowicz said. “For example, we don’t like accident cars, and there’s some dealers that do because they can sell them much cheaper. We try to stick with cars that are good used cars. Or, to put it this way, there are a lot of ‘less nice’ used cars on the market than ‘nice’ used cars, so we stick with those.”

Also, World Imports USA is also the region’s lone authorized Lotus dealer — and is looking forward to the release of the first-ever British all-electric hyper car, the Lotus Evija, in 2020.

The stunning Evija will be equipped with four electric motors to produce a power output of 1,972 horsepower — which means it can get from zero to 60 mph in under 3 seconds (and from zero to 186 mph in under 9 seconds) — and has a maximum range of 250 miles.

“Lotus is a niche market and we sell to our market and out of our market,” Sydorowicz said. “Unless you know about Lotus, it’s probably not the first vehicle you would think about when buying a sports car of its caliber, but it still has a strong following from its old Formula One days in the ’70s and ’80s.

World Imports USA is one of only 46 Lotus dealers nationwide; this provides an opportunity for additional business from outside the First Coast.

“We recently sold one to a buyer in Illinois, and it’s just because we had the right color combination that somebody wanted,” he said. “As dealers, we only stock about 30 of them at a given time, so sometimes you happen have the right one they want. In the past, we’ve had calls from California with buyers looking for the right combination of colors and features.”

Sydorowicz added that Lotus is among many manufacturers introducing several new all-electric and electric-hybrid vehicles to the market in 2020. And, folks will begin to see more of these on used car lots, as well.

“Every manufacturer, from Volkswagen to Volvo, are getting more into the (electric) area, so I think you’ll see more of these vehicles at the new-car dealerships — and more of them available as used cars as well,” Sydorowicz. “At the Los Angeles, New York and Detroit auto shows, they are all showcasing these vehicles, and all manufacturers are racing out there to get one out there that’s feasible — one that can go 800 miles on a charge and will give Tesla a run for the money.’’

Sydorowicz says that he’s seen a growing interest every year in electric and electric-hybrid vehicles, and his dealership has certain models that do well — including the Toyota Prius.

“Although Tesla’s the front runner now, it hasn’t done the greatest job when it comes to distribution,” he said. “That’s where the manufacturers are going to come in and sell them through a dealership, which is what most buyers still want — not looking through a window at the Town Center. It’s the biggest rush right now.”

When it comes to used cars overall, Sydorowicz says if the economy keeps humming along as it did in 2019, he expects a good year.

“The automobile is usually the family’s second major purchase after a home, so I think if the economy continues going the way it is, the whole automobile industry will be going the same way, too” he said.

According to industry experts, the only cloud on the horizon for used-car dealers will be identifying and keeping inventory — the right inventory — on their lot

Larry Dixon, the senior director of valuation services at J.D. Power, says that finding quality inventory continues to be a challenge — especially since used-vehicle sales are unlikely to rise dramatically from the 39- to 40-million-unit range in the next couple years.

“If you look at it, in that respect, you have more dealers competing for a finite supply,’’ Dixon said.

However, Dixon did note a bright spot for dealers when it comes to used electric cars — the depreciation on older models appears to be turning around.

According to Black Book’s three-year retention gauge, the value of used EVs this year is about 38 percent — a large improvement from only 21 percent one year ago. And J.D. Power and Associates found that the 2015 Nissan LEAF is now retaining 30 percent of its original sticker price — up 23 percent from the fourth quarter last year.

“Now we have prices up for the first time ever,” Dixon said. “So, from a consumer standpoint, that means they have an appreciating asset.’’

Ron Whittington is a Jacksonville-based freelance writer and Drive contributor. His story on 2019 new-car sales and 2020 outlook on the First Coast that appeared in the Jan. 4 Drive section can be found online at jacksonville.com.