The Manheim Consulting Used Car Report for 2104 shows that all classes of used car dealers did well in 2013 overall. It was an especially good time to be in the certified pre-owned used car business.

Manheim Consulting is known for its strong presence in the wholesale used car marketing arena. Its insights are released annually at the National Automobile Dealers Association convention and are anxiously received as the de facto word on the used car business for the prior year.

Previously, overall changes in used car marketing, which is called remarketing in the industry, were discussed. This article focuses in on the actual performance by dealers and includes highlights from the report.

Simply put, the report says, "All in all, 2013 was a good year to be a dealer. In addition to a fourth consecutive year of rising new vehicle sales, franchised dealers had record sales of manufacturer-certified pre-owned units. And, at the same time, many franchised dealers kept their retail offerings expanded to include older, higher-mileage, vehicles—a practice they started out of need during the new vehicle sales recession."

Here are some of the highlights of the report, as prepared by Manheim:

• "Independent dealers continued to wrestle with inventory acquisition challenges as what used to be a strong, steady, and direct flow of units from franchised dealers remained lower than in the past. But that challenge was more than offset by the benefit of readily available retail and wholesale financing.

For independent dealers catering to the subprime customer, it was an especially good year as lending sources continued to buy deeper."

Subprime customers are those with less-than-perfect credit. They're a staple of the independent used car dealer because these types of customers typically have trouble getting loans for products sold at franchised auto dealers, which are dealers affiliated with a new car brand like Chevrolet or Mazda for example.

• "That, in turn, created a challenge for Buy-Here, Pay-Here (BHPH) dealers as they saw a large swath of their customer base picked up by subprime lenders. But, as with independent dealers, the increased availability of capital was a more-than- adequate offset for BHPH operators. And that’s whether the capital was needed from floorplan lenders, from banks for a general line of credit, or from financial institutions buying notes at a discount."

One problem with the softening of credit is more people are able to buy more expensive used cars than they can reasonably afford. Lenders are willing to create loans of up to 84 months so that monthly payments can be kept low. That frequently leads to borrowers being "upside down" on loans, which is a stronger possibility in used cars that might no longer function by the end of a lengthy used car loan.

• "In 2013, franchised new car and truck dealers sold 15.6 million used vehicles at retail (this includes units that were sold on lots operated separately from the new car store). Franchised dealers wholesaled another 10 million units."

• "Financial reports from the seven publicly traded dealership groups provide a good reflection of trends within the franchised dealer body. These same dealer groups posted 16 consecutive quarters of declining gross margins on a year-over-year basis."

• "Having thinner margins means that the linkage between the retail and wholesale market will become tighter. Changes in one market will be more quickly, and more acutely, felt in the other. With the cushion of wide margins gone, look for subtle shifts in retail demand to be quickly reflected in wholesale buying."

• "As average margins have narrowed, so too has the range of grosses on individual transactions for individual dealers. Lacking “home-run” (high-gross) deals, dealers can now ill afford the outsized losses associated with buying the wrong car at the wrong price."

• "In 2013, sales of manufacturer-certified pre-owned (CPO) vehicles totaled a record 2.1 million units. Given the growing off-lease supply in 2014 and beyond, it is inevitable that even higher milestones will be reached in the years ahead."

Certified pre-owned used cars continue to be where the money is for dealerships. Margins might be getting slimmer but these vehicles are still popular with buyers not willing to spend larger sums of money for new cars. Certified pre-owned used cars are also popular with manufacturers as they are a means towards developing brand loyalty.

• "Online sales of units priced between $4,000–$6,000 grew by nearly 15% year-over-year."

That number refers to sales at used car dealerships. It's an interesting statistic because it shows more dealerships are getting into selling less-expensive used cars.

Will 2014 continue to be as good a year for used car dealers? It should be because supply will continue to be good across the board and credit appears to be plentiful.