Used-vehicle sales in 2022 for publicly listed Lithia Motors were challenging. The rate of increase in the average retail selling price slowed markedly in the fourth quarter and the decline in the average gross profit per used unit deepened.

Used retail sales in the fourth quarter were basically flat compared to the same quarter in 2021 while full-year sales rose only 0.9%.

The company’s executives put a positive spin on the numbers during the company’s fourth quarter earnings call.

The used market is “rebalancing at a gradual pace,” said Lithia’s president and CEO Bryan DeBoer.

Other results were mixed.

The average used retail selling price in the fourth quarter was $29,399, up 1.8% compared to the same quarter in 2021. For the full year, it was up 14.8% to $30,236.

Average gross profit per used retail unit in the fourth quarter fell 33.7% to $2,137 compared to the same quarter in 2021, For the full year it fell 11.8% to $2,648.

Lithia continues to procure used inventory from “all external channels” as well as being aggressive on retailing trade “even as pricing pressure on used continues with the rising interest rate environment and recovering new vehicle supply,” said Chris Holzshu, Lithia’s executive vice president and chief operating officer.

Pricing pressure on used vehicles should have a minimum impact on 2023, he said, because Lithia carries less than a 60 days’ supply of used vehicles.

Holzshu also suggested the supply of newer used would remain constrained for the foreseeable future. “The shortage of late-model used vehicles from an abnormally depressed new vehicle SAAR environment takes years to normalize,” he said.

However, he also said Lithia’s is “very optimistic about the recovery in (used) volume.”

Meanwhile, Lithia offers a “vast range of products at all price levels,” said Holzshu, including selling and servicing vehicles up to 20 years and older. They are represented by Lithia’s value segment, which accounts for 17% of the group’s used volume.

In response to an analyst’s question about the used market “firming up,” Holzshu attributed the move to seasonality. Since Lithia carries only 50 to 60 days’ supply of used, the group can “clear fluctuations in both directions pretty quickly,” he said.

A recovery in used-car inventory is more important to Lithia than a rise in Average Selling Price, said Holzshu, because “it impacts our ability to drive used-car volumes, which really is our biggest driver in profitability because it is all about gross profit.”