If you have been looking for used car franchise opportunities, now might be a good time to decide due to the growing preference for second-hand vehicles among Americans.
As of the end of 2018, the average cost of a new vehicle reached $35,671 based on a report. Depreciation rates also increased to around 23% after just 12 months of owning a new car. The value of some models could even fall up to 35% after the same time, so it’s not surprising why more people have considered buying a used car instead.
How Prices Have Changed
Americans who bought new cars in 2012 only paid less than $30,000. These days, as much as 65% of new vehicles are priced more than that amount. In fact, almost 25% of new cars now cost more than $50,000 on average compared to 6% seven years ago. If a person decides to buy a second-hand vehicle, it’s possible to save up to $8,200 based on the average price of a new car.
While this seems encouraging for aspiring used car dealers, take note that people could shop for pre-owned vehicles online. This indicates a harder time to attract clients for those who want to start their own business, as opposed to a franchise model with an established network. Competition remains tight at the same time, particularly from other dealerships that are aggressive in their pricing strategies.
Another reason for a growing car ownership rate in the U.S. is the bigger population. For example, China and India are the only bigger markets in terms of vehicle consumers. This will continue in the future as migration rates tend to increase, although demand can vary in certain cities. Some metro areas like Baltimore, Miami, New York, and San Francisco will have a constant need for cars.
In the rest of the country, around 76 out of 100 people own vehicles, whether new or used ones. Used-car buyers usually spend more than five hours when looking for a car. Many of them only visit one dealer, so estimating the return on investment in a used car dealership will significantly depend on the location.
The Link to Success
Car ownership might no longer be a status symbol like it was 50 years ago, but it remains a crucial factor for success, especially for needy families. A study showed that a low-income household with a car has a higher chance of achieving success and finding better employment opportunities.
If a family has a car, then it means that most if not all of the household members own a driver’s license, which is a requirement for jobs in specific industries like construction and manufacturing.
In the end, some people think that buying a car is easier now due to the availability of more models, while others consider inflation as the primary factor for higher prices. Once you know where to establish your own used-car business, you should consider the pros and cons of a franchise before making a decision.