Washington Automotive Wholesalers Association

"Over the next five years, there will be a rapid reduction in the number of newer used vehicles as a result of the plunge in new car and light trucks sales beginning in 2008."

"With over one-quarter of Dealer profits generated by used-vehicle sales, Dealers are facing a bottom-line crunch. The only alternative for many Dealers will be to aggressively promote service bay business, which presently accounts for about half their profits. Expanding their service bay work, and the profits it generates, will help Dealers to compensate for the rapid loss in revenue from lower used-vehicle sales over the next nine years."

Jim Lang, The Lang Report

With new car and light car sales plunging from an average of nearly 17 million units per-year (1999 to 2007) to less than a 12 million new vehicle annual average between 2008 and 2014, there will be a rapid drop in used vehicles seven years and newer through 2017, with used-vehicles shortages in key model years continuing to 2020.

Major Dealer Profit Streams

Virtually all Dealer profits come from two sources: used-vehicle sales along with parts and labor volume. For most Dealers, new car and light trucksales do not contribute to the bottom line.

With the coming plunge in used vehicles available for Dealers to sell, Dealer profits from used-vehicle operations will crater. To compensate for this income loss, Dealers need to drive other sectors of their business.

The only major opportunity for Dealers to expand profits (to compensate for the loss of income from lower used-vehicle sales) with be to promote parts and labor sales, primarily through their bays.

Renewed DIFM Competition From Dealer Bays

This means Independent (non-Dealer) service outlets will face renewed competition from Dealers who are being squeezed by a lack of used vehicles and dwindling warranty dollars (resulting from improved vehicle quality and reduced new vehicle sales).