‘Strength in numbers’ helps Milford used car dealers thrive
“The used car market has been strong, but not as strong as it has been in recent years,” said Damien Regan, owner and operator of DealerTown Auto Wholesalers. “It was a bad year for us.”
Regan said what influenced her the most was high interest rates and the availability of cars.
“So it wasn’t a bad year, but it wasn’t as good a year as it has been in the past,” he said. “We get our cars through trade-ins, and most new car dealers keep those trade-ins, so there’s not much for the used car dealers to buy.”
Chip Rubenstein, owner of Chip’s Auto Sales, also cited the impact of higher interest rates on the used car market.
“Many customers have not yet understood that,” he says. “If the home mortgage rate approaches or exceeds 7 percent, a used car installment loan will always be that or higher. It’s just an economic factor.”
That means less purchasing power for the customer, he said.
“Buying a vehicle in the same price range is more expensive than it was six months or a year ago,” he said. “So that’s a whole factor impacting the used car market right now.”
The disruption in the supply chain, which reduced the availability of new cars, also impacted the used car market. But the new inventory has helped the overall used car situation, Rubenstein said.
“After 47 years in business you think I would know all the answers, but the questions changed with COVID and we didn’t have an answer,” he said. “While the situation in the supply chain is self-correcting, there is somewhere between a trickle and a trickle of more new cars being delivered, which is helping the used car situation.”
Rubenstein said the location of his store in Milford helped him and others survive.
“From an automotive environment that’s been here for 47 years, it’s something of a Mecca,” he said. “For example, we just delivered a GMC Yukon to people from Greenwich. Not from the internet or any other advertisement. They just decided to go to Milford and drive the Strip because they knew there were several dealerships.”
When it comes to auto sales, strength lies in numbers.
“There are many dealerships and vehicles for sale, which makes it a great place to sell cars,” Rubenstein said.
According to Chuck Dortenzio, operations manager for Key Auto Group, the used car market is strong, although it has declined somewhat as the supply of cars has eased.
“Prices have come down a bit because there’s more inventory now,” he said.
According to Rami Abou Al Laban, COO of Key Auto Group, the days when used cars could fetch as high prices as brand new ones are over.
“That was because there were no new cars available,” he said. “That’s why these used cars were expensive.”
While he didn’t have specific data on the local used car market, Abou Al Laban said new car sales in Milford have been increasing year on year.
Rubenstein, who opened his dealership in 1976, said there are always cycles and trends.
“I remember in the late ’70s used car rates were 21 percent,” he said, “with the longevity that I have in this industry, I’ve seen a lot.”
However, there are a few factors at play in the used car market, Rubenstein said.
“When COVID came out, there were big availability issues, just a lack of salable inventory,” he said. “It’s a little more relaxed, but one of the things that feeds the used car inventory is vehicles without leases, and a lot of people buy their leased car because it’s the most economical.”
There are only two ways to acquire used cars: buy someone’s car or sell them a new car, and they trade their used car, Dortenzio said.
“Those are the only two ways to build a car,” he said. “So when we didn’t have a new car inventory, not just us but other dealerships, the new car inventory was very low due to COVID and supply chain issues. The used car market was also a challenge as people just needed to buy more and we couldn’t get many of them. So inventory was very low and prices very high.”
Rubenstein said the market has eased up a bit depending on what types of vehicles people want to buy.
“Things like high-end luxury vehicles and certain pickup trucks have become more available and more realistically priced,” he said.
The cleanup on the used car market has started because there are now more new car inventories, said Abou Al Laban.
Auction houses, where new-car dealers can ship used cars they don’t want on their lots, also reflect the ebb and flow of supply chains, Dortenzio said.
“Sometimes wholesale prices are a barometer of the market. We go to these auction houses and the prices are just insanely expensive and it doesn’t seem like you can buy at auction,” he said. “But then there are other times when the auction is a good place to buy and of course you’re going to buy the right car for your business.”
Regan said the number of cars being sold at auction is about half what it used to be.
“Prices have not yet come down to reflect changes in the market,” he said. “The only thing that has stayed constant is that car prices have stayed high. Other factors have changed, but that’s one factor that hasn’t changed, so I would expect it to stay the same for a while in the future will.” . High prices and lack of stock.”
The weather can also affect the price and availability of used cars.
“When the hurricane hit Florida, it hurt the used car market because Florida is the largest used car market,” Abou Al Laban said.
Dortenzio agreed.
“Imagine Tampa even though many car dealerships are being flooded. All these cars go to scrap and these guys need to exist and do business and the only way to do that is to go to auction and buy cars or wait to add new cars to their inventory,” Dortenzio said “That’s also going to drive up auction prices or keep them up at a time when they wouldn’t normally be. So it’s an outside influence that’s causing that.”
