Car dealers having a good 2022, NADA data show – Automotive News

September 22, 2022 by No Comments

“It’s going to be another great year for the average dealership,” Manzi said. “It’s probably going to be in line with what they saw last year, if not down just a little bit because new and used volumes are down slightly.”

Manzi declined to share specific information about average dealership profitability. NADA no longer publicly releases profitability data, nor its average dealership financial profile report. Association officials say the average dealership financial profile is now reserved for dealers participating in NADA 20 groups.

Franchised dealers posted back-to-back record profits the last two years, and Manzi’s assessment of 2022’s first half suggests they will enjoy robust profits again this year, though perhaps not another record year.

The average U.S. dealership earned an estimated $4.1 million in net pretax profit in 2021, according to Erin Kerrigan, managing director of Kerrigan Advisors, a dealer advisory firm in Incline Village, Nev. Kerrigan calculated that number using NADA’s data through October showing the average U.S. dealership earning net pretax profit of $3.4 million, more than double the $1.6 million earned in the same period in 2020. NADA stopped reporting the information after its October 2021 report, but that 10-month number had already far outpaced the average dealership’s $2.1 million in net pretax profit reported by NADA for all of 2020.

Net pretax profit includes operating profit and automaker incentives that dealerships receive for meeting specific performance targets.

The midyear NADA Data report for 2022 shows dealership parts and service and used-vehicle businesses have helped to offset a decline in new-vehicle sales throughout the ongoing semiconductor and inventory shortage. The average new-vehicle dealership had total sales of $36.9 million through June, up slightly from a year ago. Share of total dealership revenue coming from new-vehicle sales fell to 48.7 percent through the first half of this year from 54.6 percent for the same period in 2021, while shares coming from used-vehicle sales and parts and service both rose.
Dealerships on average sold fewer new vehicles through June compared with the same period a year ago, and even significantly higher transaction prices couldn’t make up for the volume drop. The average dealership sold 404 new vehicles through June at an average transaction price of $45,646, according to NADA. In comparison, the average dealership sold 498 new vehicles through June 2021 at an average transaction price of $40,232.

Volume was significantly higher and transaction prices significantly lower before the pandemic — the average dealership sold 503 new vehicles at an average price of $36,402 in the first six months of 2019.

This year, Manzi said, “we’re still seeing dealers working through sold order backlogs stretching out several months in many cases.”

The supply crunch will cap sales volumes for the rest of the year, he added.

“I kind of expect that we’re not going to see sales pick up too terribly much before the end of the year,” Manzi said. “Maybe if we see any more increases in production or we get a burst of chips, some of those sold orders that are backlogged can be met, but it’s not going to be anything that’s going to dramatically increase sales in the final quarter.”

New-vehicle prices should remain elevated for the rest of the year, he said, in part because of the combination of automakers prioritizing higher-trim models and lower incentive spending. Average incentive spending per vehicle declined every month to a record low of less than $1,000 in June, according to the midyear report. That’s down from a record high of more …….



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