Dealers need to focus on loyalty to drive used car business

Jake Stacey, Executive Vice President of Sales and OEM Performance at LGM Financial Services

With the Canadian used vehicle market heating up, average prices climbing and inventory tightening, dealers looking to stand out from competitors and private sellers can thrive with certified pre-owned (CPO) strategies, says one industry strategist.

Jake Stacey, Executive Vice President of Sales and OEM Performance at LGM Financial Services, told Canadian auto dealer that CPO programs are emerging as a key lever for sales, customer trust, and long-term retention.

“Certified programs are the anchor,” said Stacey. “They keep customers in the dealer’s ecosystem, driving retention, loyalty, and fixed ops revenue. In a market where new-car margins are under pressure, used-vehicle service revenue is critical to offsetting lost sales and protecting long-term profitability.”

She noted that COVID-era production slowdowns, which cut off trade-ins and lease returns, continue to limit supply. Combined with affordability pressures, more buyers are turning to used vehicles. “Those missing vehicles from 2020 to 2022 simply don’t exist,” she said. “Dealers should expect 18 to 24 more months of tight supply.”

Luxury SUVs remain scarce, while EV availability is split. Some mainstream models are oversupplied, while premium EVs are still in short supply. Stacey said dealers face a balancing act between sourcing used inventory and leaning on OEM-backed incentives in new vehicles.

“Used is critical for margin but requires disciplined sourcing,” she said. “New vehicle programs can help offset affordability challenges. The dealers outperforming are the ones striking the right mix. Add in solid F&I revenue and they’ll weather the storm.”

Currency dynamics are also squeezing Canadian operators. “The strong U.S. dollar makes Canadian vehicles attractive for export, which drives wholesale prices higher here,” Stacey said. “Dealers often feel like they’re paying U.S. prices, and in many ways they are. That’s why margin protection and retention strategies are essential.”

At the same time, fixed operations remain under threat from aftermarket chains expanding into high-margin services. “Dealers can’t afford to lose service customers to Mr. Lube, Canadian Tire or Great Canadian Oil Change,” said Stacey.

Ultimately, she said, the dealers that will succeed are those combining discipline with creativity, managing inventory smartly, protecting every margin opportunity, and keeping customers loyal. “The market will normalize in time, but the dealers who build strong retention strategies now will come out stronger on the other side.”