Used-Car Market Q1 FY2027: Nextage surges as USS delivers standout margins
Companies compared · 3
Takeaway
Growth leadership and earnings structures diverged sharply across the sector.
The used-car market's three players grew sales and profit in Q1 FY2027, though Nextage reported interim results. Nextage led sales growth at 26.6%, while USS's 51.7% operating margin highlighted sharply different earnings models.
Industry Overview
All three companies reported higher sales and profit, but their reporting periods differ: USS and IDOM reported first-quarter results, while Nextage reported its interim period. Their figures are not directly comparable by scale.
- Used-car demand remained firm. Nextage's used-car registrations rose 0.2% year on year in the interim period.
- Higher new-car sales also provided a tailwind for USS. With the environmental performance levy abolished, auction listings increased 4.7% and deals rose 8.4%.
- For retailers, growth depended on retail unit sales and store networks. IDOM recorded a first-quarter record for retail units sold.
- All three grew revenue, but profit growth varied. Procurement, inventory and sales management shaped earnings.
Revenue Ranking
Nextage reported the highest revenue, but its figures cover an interim period. The reporting period differs from the first-quarter results of the other two companies, so comparisons of scale require caution.
Operating Profit Ranking
USS's operating profit exceeded that of the two retailers. Auction brokerage and retail have different earnings structures, and the reporting-period differences also matter.
Winner and Loser
Nextage stood out for growth. Interim revenue rose 26.6% to ¥391.2 billion, while operating profit nearly doubled, up 99.3% to ¥14.1 billion. New store openings and co-located purchasing outlets supported sales expansion and strengthened procurement.
IDOM had the lowest operating margin among the three at 2.7% in the first quarter, below Nextage's 3.6%. Operating profit rose 15.4% to ¥4.4 billion. Net profit was up 22%, however, so performance did not deteriorate.
USS recorded the largest operating profit of the three, rising 9.8% to ¥16.2 billion in the first quarter. Its 51.7% operating margin was also striking. But the auction-brokerage model differs from the retail-focused businesses of the other two, making direct margin comparisons misleading.
Winner
Nextage
Laggard
IDOM
Operating Margin Ranking
USS's margin stood out. Its revenue structure differs from the retail-focused businesses of IDOM and Nextage, so the margin gap also reflects differences in business models.
Key Moves and Strategy
USS increased auction volumes, with listings up 4.7% to 950,000 vehicles and sales up 8.4% to 619,000. Membership fee revisions also supported revenue, while metal prices and large demolition projects lifted recycling profits. The company raised its full-year forecast and is also buying back shares.
IDOM achieved a first-quarter record for retail unit sales. Better inventory management and price adjustments helped turn higher sales into profit growth. Revenue rose 15.5% to ¥159.6 billion, and operating profit increased 15.4% to ¥4.4 billion.
Nextage expanded new stores and strengthened its network of purchasing outlets. Interim revenue increased 26.6% to ¥391.2 billion, and operating profit climbed 99.3% to ¥14.1 billion. The company raised its full-year forecast.
Common Industry Risks
- Higher procurement prices can squeeze retailers' gross profit. Inventory write-downs are another risk.
- A slowdown in demand can weigh on inventory turnover and store investment. Companies expanding quickly face higher fixed costs in particular.
- Volatility in used-car prices and metal markets can affect auction and recycling earnings.
- Maintaining customer trust and complying with regulations are essential to sustaining sales. The industry's overall reputation can also affect customer traffic at each company.
- Intensifying competition in auctions, vehicle purchasing and retail can make it harder to protect margins on both procurement and sales.
Ranking Changes and Structural Trends
Revenue ranked Nextage first, IDOM second and USS third. USS led in operating profit, showing how business models can change the rankings.
Revenue growth was 26.6% at Nextage, 15.5% at IDOM and 14.1% at USS. Operating profit growth was 99.3% at Nextage, 15.4% at IDOM and 9.8% at USS.
Nextage's figures cover an interim period, while the other two companies reported first-quarter results. Because the periods differ, revenue and profit rankings should not be treated as a direct measure of competitiveness.
Year-on-Year Revenue Growth
All three companies grew revenue, with Nextage posting the fastest growth. Store openings and a stronger purchasing network supported expansion, though Nextage's figures are for an interim period.
Year-on-Year Net Profit Growth
Net profit growth was strongest at Nextage, followed by IDOM and USS. Comparisons should also take account of the differing reporting periods and the factors behind each company's profit growth.
For Job Seekers and Career Changers
In used-car distribution, procurement and inventory management matter as much as sales. IDOM's strengths include pricing adjustments, Nextage's include store expansion and its purchasing network, and USS specializes in auction operations and recycling.
When choosing an employer, consider which business the role you want, such as store sales, vehicle appraisal, data analysis or logistics, supports. Growth companies may offer opportunities as they open stores, but they also bring greater responsibility for sales targets and inventory management.