NEW YORK and IRVINE, Calif. -

The used-car market is still challenged by a lack of lease returns — an issue not likely to get better until the first quarter of next year — but dealers have received a shot in the arm from one particular consignment segment in the auction lanes, according to Kelley Blue Book.

And oddly enough, this boost has actually stemmed from the sluggish economy-provoked “weak travel season,” says Alec Gutierrez, senior market analyst of automotive insights.

“With the economy improving at an anemic pace, consumers are travelling less often and for shorter trips. This has had a direct impact on the rental car business, reducing demand for rental cars and prompting rental car agencies to trim their fleets,” Gutierrez said.

“This has helped to increase inventory at auctions, putting additional downward pressure on prices,” he added.

But, turning to another used supply segment, KBB stressed that while trade-in volume for franchised dealers has climbed, they’re not consigning these units in the wholesale lanes.

“Franchised new-car dealers also have seen a jump in trade volume related to increased new-vehicle sales, but this has not trickled down to auctions since most dealers are retaining their trades for retail sale,” Gutierrez shared.

He emphasized  that although increased rental units in the lanes has helped, dealers are still not getting enough used units to meet their inventory needs.

“Most dealers we have spoken with have indicated that they are typically opting to retain a customer’s trade-in rather than send it to auction,” he noted.

In fact, Group 1 Automotive senior vice president and chief financial officer John Rickel addressed this topic earlier this week at the J.P. Morgan Auto Conference in New York. On-demand webcast recordings of presentations from the event were posted online.

In the retailer’s used-vehicle operations, Rickel said that “what we’ve really been focused on is driving those higher-profit retail sales."

Group 1 — which was No. 6  on Auto Remarketing’s Top 125 Used-Car Dealer Groups list — averaged around $1,765 in gross profit per retail unit in the second quarter, versus just $29 in wholesale gain per unit, the company said.

“It’s basically about a break-even business," he said of wholesaling vehicles. "So for every unit we can move from that wholesale bucket up to retail, there’s a nice profit opportunity."

And it’s a practice that has grown some legs. He pointed out that in 2005, wholesale revenues represented 27 percent of Group 1’s used revenue. That dropped to 14 percent for year-to-date 2012. During the same time frame, Rickel said, the used retail-to-new ratio has jumped from 0.53 to 0.70.