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.