MCLEAN, Va. — The 1.7 million-unit increase in
new-vehicle sales last year helped increase profitability for franchised
dealers, according to NADA Data 2013 report. The industry also added to
its dealer count last year, as it continued to benefit from economy’s
Last year, U.S. franchised dealers sold 14.4 units last year, up 13.4
percent from 2011, according to the National Automobile Dealers
Association’s state-of-the-industry report. Total dealership revenue
reached $676 billion, growing by 9.8 percent. Net pretax profit was
high, with the average store generating $832,697 in 2012.
Total dealership gross margins fell 14.4 from 2011 to 13.7 percent.
Total dealership net profit before tax as a percent of sales was also
down slightly, falling from 2.3 in 2011 to 2.2 percent. Dollar profits
gained 6.2 percent.
Additionally, advertising expenses increased on high unit sales, but fell on a per-vehicle basis to $621.
The industry also ended the year with a net increase of 95 franchised
dealerships, bringing the total to 17,635. However, there was a decline
in the number of dealerships selling 149 or fewer units. The report
also spotted a decline in dealers selling between 150 and 399 new units.
The NADA’s annual report did spot a rise in the number of dealerships
selling between 400 and 749 new vehicles per month, as well as retail
outlets delivering more than 750 new vehicles.
“Although there was a net increase in U.S. franchised dealerships in
2012, the rise in the number of dealerships was not evenly spread across
the country,” the study states, in part. “The increase in franchised
dealerships for 2012 was most heavily focused in the Western regions of
the [United States], while Eastern regions saw a reduction in the number
of franchised dealerships for the most part …”
The industry continued to close in on the 16 million-plus-unit years
between 2000 and 2007, with new-car sales up 18.9 percent from 2011. New
light-truck sales were up 8.3 percent vs. 2011.
Average selling price of new light vehicles rose by 0.8 percent.
The gross margin on the sale of new cars and trucks continued to
fall, dropping from 4.6 percent in 2011 to 4.2 percent last year.
However, new-vehicle department profitability as a percentage of gross
profit rose to 30.4 percent from 28.8 percent in 2011, while
used-vehicle department profitability as a percentage of gross profit
rose to 25.6 percent from 25.4 percent in 2011.
The share of gross profit held by the service and parts department
fell to 44 percent from 45.8 percent in 2011. The share held by F&I
and service contracts, however, rose to 36.9 percent from 33.8 percent
Additionally, new-vehicle service contract penetration rates
increased last year by 2.7 percent from the prior year, while used-car
service contract penetration rates remain relatively stable.
To read the full report, click here.