Market Trends Behind Asbury Automotive’s Closure of Q Store

By Jon LeSage, Edi­tor, Used Car Mar­ket Reports

Asbury Auto­mo­tive Group has decid­ed to close the Jack­sonville, Fla., loca­tion in its Q used car retail chain. It was the largest store in the fair­ly-new Q chain. The remain­ing two Q stores in Fort Myers and Bran­don, Fla., have been per­form­ing bet­ter than the Jack­sonville store.

The Jacksonville’s 36 employ­ees were noti­fied last week, and the store is set to close down by the end of the month. The employ­ees will move to oth­er Asbury stores.

Here are few of my thoughts on mar­ket trends behind the deci­sion to orig­i­nal­ly open and even­tu­al­ly close that Q store:

  • Asbury launched the Q brand in mid-2014 to test the pop­u­lar­i­ty and prof­itabil­i­ty of pre-owned car stores. Return on invest­ment hasn’t met Asbury’s tar­gets for the large store. The remain­ing two stores are small-for­mat loca­tions and have per­formed bet­ter than the Jack­sonville store.
  • Asbury tried to tie in the Cog­gin brand name to Q a few months ago, but it didn’t gain enough trac­tion to increase sales to the lev­el need­ed. Cog­gin is a brand used by Asbury’s fran­chised deal­ers in that mar­ket. Asbury had hoped for local mar­ket trac­tion com­ing through, but it wasn’t enough.
  • Used vehi­cle sales at fran­chised deal­er lots have increased sub­stan­tial­ly in vol­ume and rev­enue since the auto industry’s col­lapse in 2008–9. Since then, pre-owned vehi­cle depart­ments have increased in staff size and resources. Mar­ket­ing bud­gets have become more devot­ed to that depart­ment, espe­cial­ly through growth in cer­ti­fied pre-owned vehi­cle sales.
  • Car­Max, which has become the largest auto retail­er in the U.S., can be a tough com­peti­tor with its huge lots filled with new and used vehi­cles. Asbury isn’t ignor­ing it: “Car­Max doesn’t offer many of the ben­e­fits that Q auto FL stores offer, includ­ing mon­ey for your trade or used car same day,” says the Q web­site.
  • Large inde­pen­dent deal­ers have been the biggest used car com­peti­tors for fran­chised deal­ers in some U.S. mar­kets, with some of these inde­pen­dents com­ing from the down­sized Chrysler and GM deal­er net­works.
  • Car rental com­pa­nies are play­ing their part in the mar­ket with Enter­prise, Hertz, Avis, and Bud­get lead­ing the way with their own retail lots. Con­sumers in Mis­souri and Okla­homa can now test-dri­ve and pur­chase vehi­cles com­ing from the Avis and Bud­get car rental fleets through the expan­sion of Avis Bud­get Group’s con­sumer car sales pro­gram. Enter­prise Car Sales just rec­og­nized its 30-year alliance with cred­it union part­ners offer­ing cred­it union mem­bers com­pet­i­tive loans through Enter­prise used car lots. Enter­prise Car Sales gen­er­at­ed close to $500 mil­lion in loan vol­ume to near­ly 28,000 cred­it union mem­bers dur­ing 2015.
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