Industry Report

Used-Car Dealerships Take the Digital Leap

YOUNGSTOWN, Ohio – Although sales of used cars in the Mahoning Valley are dominated by dealerships with manufacturers’ backing, there’s still a place for independent dealers who peddle pre-owned vehicles.

By and large, used-car dealerships are small. In its 2018 annual report, the National Independent Automobile Dealers Association reported 64% of its roughly 20,000 members employed four or fewer stores and 96% had a single location. Retail sales are also small: 28.7% of its membership reported fewer than 100 sales in 2017 and 26.4% between 101 and 250 sales. The majority of sales, 60.4%, were between $5,000 and $10,000.

These days, most business is driven by the internet, says Dick Frost, general manager of Direct Sales & Leasing, 8141 South Ave. in Boardman. Indeed, 80% of used-car stores, according to the national association, reported spending money on online advertising; the No. 2 medium was newspapers at 21.3%. And with that online presence comes a larger pool of customers.

“We spend a boatload on advertising to bring people in from everywhere. We try to price aggressively. We’ve had people come to us from a couple hours away,” Frost says. “We shipped a car to France about five months ago, an older two-seater Mercedes. That’s the power of the internet.”

And it doesn’t just benefit customers. The rise of the internet has made it easier to buy cars at auction, says Chris Haus, owner of Haus Auto Group, 4141 Boardman-Canfield Road in Canfield. 

“I haven’t been to an auction yet this year, but I do a lot of mobile and online auctions,” he says. 

Auto auctions, he continues, have made the process easier, with many putting up detailed inspection reports for each vehicle they list, which cover everything from damage to the depth of the tire treads. 

And rather than having just a couple of minutes to inspect and bid on a car, Haus can do his research and bid as needed. Plus, many have added options to benefit buyers such as Haus.

“If I get the car and it’s not the way it was called on the report, I can maybe return it or get a reimbursement to fix something that wasn’t noted,” he says. “Years ago, if you bought a car at auction and there was something wrong with it, well, you’re the one who owns it.”

What dealers buy, whether at auction, from trade-ins or from private sellers, is dictated by the market. Haus Auto has a meeting of his sales staff every Friday to go over the rolling 60-day inventory and put together buy and do-not-buy lists for the coming week. 

At Direct Sales & Leasing, Frost keeps an eye out for cars that fit into patterns he’s noticed over his more than 25 years in the business. “There’s seasons for cars. There’s convertible season, minivan season, four-wheel drive season. You buy based on the time of year and what’s going on,” he says. 

At Agree Auto Sales, 4126 Youngstown Road SE in Niles, general manager Stacey Gardner says SUVs are most popular right now. Gardner and her team opt to go to auctions in person, rather than take the digital route, to get a better feel for what they’re buying, she says. 

One of the store’s biggest assets, she continues, is its location. About a mile north of the Eastwood Mall on U.S. Route 422, Agree has thousands of potential customers drive by daily. The store there replaced a previous one on West Market Street in Warren.

“We saw people started coming less and less to that store and for a while had two locations, until we closed that one because we weren’t getting enough traffic,” she says. 

Likewise, Haus and Direct are both along well-traveled roads; Haus on U.S. Route 224 and Direct on South Avenue, not far from the final exit on Interstate 680. 

While the three acknowledge that the stereotype of a used-car salesman still exists, it’s rarely the reality, they say. With the rise of the internet, buyers can easily compare prices on vehicles they’re looking at and do research on which dealers have what inventory.

“Years and years ago, we had the guys who’d wear gold chains and all that, but the business has changed a lot. Those things are just memories,” Frost says. “With the internet, if you’re not the cheapest out there, you won’t have anyone driving three hours to come buy. A lot of the haggle has left the business.”

To combat preconceived notions about used-car dealers, customer service has taken a spot front and center, they say. Haus Auto includes two free oil changes and lifetime brake replacements for the cars it sells, while Agree has discounted service rates for customers after they make their purchase.

Even when it comes to financing, Agree works with shoppers as much as possible to get them into cars and even offers in-house financing – based off a points system that factors in employment, down payment, residency time and others – for those with bad or no credit.

“By the time people get here, sometimes they have a huge chip on their shoulder because they’ve been told no and don’t get respect from new-car dealers,” Gardner says. 

“Everybody goes through things and we keep that in mind. Everyone is only a divorce, sickness or death in the family away from credit problems. We want to provide a benefit to our community.”

Pictured: Chris Haus, owner of Haus Auto Group, says most auctions he attends are only online, due to the rise in comprehensive reports about the cars he can bid on. 

Copyright 2019 The Business Journal, Youngstown, Ohio.