A low supply of used vehicles has put the squeeze on auto dealers trying to scrape up inventory. But some in the industry have a possible solution for filling sparse lots — buying, reconditioning and selling lower-grade vehicles.
Normally, dealers prefer purchasing vehicles at auctions in the best condition. But used-vehicle prices have surged, forcing dealers to choose between spending more for a vehicle in good shape or fixing up one that’s in a rougher state than desired.
Vehicles in poorer shape are those 2 to 4 years old with dents, scratches, bad brakes, torn seats and other wear. A number of dealers consider it risky or simply unprofitable to invest in them.
But dealerships with beefed-up reconditioning departments might find taking the plunge into more extensive work to be worth it, said Edward French, a proponent of reconditioning who has 47 years of experience in automotive retail.
“The guiding principle is to make the vehicle mechanically sound and cosmetically nice, not perfect,” French told Automotive News. “So think of [it] as buying a house, but it may need new carpet.”