A used-car chain active in Broward and Miami-Dade is expanding to Palm Beach County, as competition heats up in the booming used-car market.
Florida Fine Cars aims to open in September in West Palm Beach at the site of a former Saturn dealership at 1220 North Military Trail.
It plans to start with some 30 employees at the site in a two-level showroom in a "really cool building. It's kind of like a giant cube," said marketing director Jamie Suid.
Operators of the chain paid $4.8 million for the 4.64-acre parcel and its existing auto center, according to Salzman Real Estate Advisors of Dania Beach, which specializes in auto and retail properties. Salzman represented the buyer, Capital Group of Broward.
The expansion comes as new-car dealers increasingly focus on the used-car market.
That's because the Internet has made it easier for consumers to compare new-vehicle prices, shrinking profits on new models. Used cars are tougher to compare because of mileage and condition, offering higher profits.
In addition, the used-car market is much larger than the new-car market. And Florida is a key state for the used-car sales because of its large and growing population and limited public transportation, analysts say.
Two friends launched Florida Fine Cars in 1993 and now keep about 150 to 200 used vehicles on their original site in Hollywood. They expanded to a roughly 10-acre site in Miami Gardens in 2010 that holds about 600 used cars, but are running out of room there too, Suid said.
Palm Beach County offers "good potential" for growth, while allowing the chain to keep its accounting and other back-office functions centralized in Miami Gardens, Suid added.
In West Palm Beach, Florida Fine Cars expects to show about 300 used vehicles at a time. That site probably will sell a greater share of 4x4 sport-utilities and pick-up trucks than others in the chain, he said.
"Further south, it's a very image driven market," said Suid, noting that buyers love used BMW, Mercedes and Lexus models in Hollywood and Miami Gardens. "In Palm Beach County, it's a lot more laid back."
Suid said the chain sells mainly vehicles 3 years old or newer that it obtains through auctions, off leases and from auto rental companies. Business has been growing partly because of the availability of financing for longer repayment periods, making monthly payments lower.
Some banks now offer loans for seven years, allowing buyers to afford used luxury vehicles for a monthly payment similar to what it costs for a car that is not premium, he said.
What's more, buyers today are more familiar with "Certified Pre-Owned" programs that offer extended warranties on luxury cars a few years old and prices thousands of dollars lower than new vehicles, said auto analyst Jesse Toprak of Toprak Consulting Group of Santa Monica, Calif.
"Demand is strong for all price ranges of used vehicles, which is good for dealers," Toprak said. He forecasts record sales of used cars in the U.S. this year — close to 50 million. That's almost triple the roughly 17 million new vehicles expected to be sold nationwide. "The used-car market is booming."