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NADA: Dealers Had Profitable 2012

July 22, 2013

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 continued recovery. 

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 in 2011.

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.

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