Report: Dealer profits rise, despite lower sales

Article by Christian A., on July 4, 2011

According to the National Automobile Dealers Association, the average dealership’s net pretax profit margin reached its highest in 24 years in 2010 despite the weak new-car sales for the fifth straight year.

Specifically, the net pretax profit as a percentage of total dealership sales in all departments was 2.1 percent in 2010. This is an increase from the 1.5 percent in 2009, and is the highest since 1986, NADA disclosed in its annual data report released last week.

Year over year, the average dealership's profit increased 60 percent to $642,057. Overall results were boosted by the used-vehicle department and the service-and-parts operations.

In addition, dealerships obtained an increase from the much lower floorplan expense brought about by tighter new-vehicle inventory and low interest rates. Dealerships that survived the factory bankruptcies and downturn also caught up with sales and service business from competitors that shut down, chief economist Paul Taylor at NADA revealed.

The population of the dealership declined another 760 in 2010 to 17,700. It previously declined by 1,550 in 2009, and 760 in 2008. When it comes to finance and insurance income, it increased 15 percent in 2010, and service contract penetration was 39 percent, which is up from 37 percent in 2009.

However, this performance failed to push the new-vehicle department into being profitable as it had during the five-year stretch. Even if the loss dropped substantially from 2009, the average dealership lost $92,581 when it comes to the new-car sales department in 2010.

Topics: dealer, profit, sales

If you liked the article, share on:

Pin It

Comments

Recommended

To the proud owners and owner-to-be of the Porsche 991 Carrera GTS, there's good news for you all. German automobile manufacturer Porsche recently confirmed to the public that the Porsche...
by - March 23, 2017
McLaren diehards, this is the moment that you're all waiting for. The British automaker recently publicized the teaser outline of its new automobile that will hit the streets soon, dubbed...
by - March 23, 2017
PSA seems very confident about conquering the world. The purchase of Opel/Vauxhall for €2.2 billion ($2.3B) from General Motors makes PSA the second largest car company, just behind the Volkswagen...
by - March 23, 2017
Reporting for duty. It’s been a year since the Victoria Police was loaned a new Mercedes-AMG GLE 63 S Coupe. In those 12 months, the coupe served as the law...
by - March 23, 2017
After making its debut at the Paris Motor Show last year as a concept car, the Trezor by Renault managed to bring home the 2016 Concept Car Design Of The...
by - March 23, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries