Dealerships Employ More Than One Million Again

dealership employU.S. dealerships employed more than 1 million people in 2013, the first time the industry has topped that threshold since 2008, early in the recession.

The 2013 total of 1,008,800 marked a 3 percent gain from 2012, the National Automobile Dealers Association reports in NADA Data 2014, the group’s annual report on dealership sales and financial trends released today.

NADA takes its data from dealer financial statements, which are audited and overseen by banks and the auto manufacturers. The data is real, pay attention below to dealer’s net profit per new vehicle. Some of you doubt me when I say dealers don’t make money on new cars, here is the proof.

The average dealership employed 57 people in 2013, up from 55 in 2012, and had an annual payroll of $3 million, up 3 percent. Total payroll for all dealerships was $53.7 billion last year.

NADA Chief Economist Steven Szakaly forecasts continued growth for the industry in 2014.

“The economic recovery is continuing, and we expect a stronger housing market, improving job prospects and continued low interest rates for auto loans to boost sales this year,” Szakaly said in a statement.

Szakaly is forecasting total light-vehicle sales of 16.4 million in 2014, up from 15.6 million in 2013.

Yet overall dealership profitability is unlikely to rise in 2014 from the 2013 industry average net pretax profit margin of 2.2 percent, defined as pretax profit as a percentage of total revenues. NADA released the figure for 2013 in February. The metric is expected to remain unchanged at 2.2 percent this year, Szakaly said in the report.

“Fierce price competition — whether from online research, a network of competing franchised dealers or compelling new vehicles — continues to dominate an industry with slim retailing margins,” Szakaly said.

Through the first three months of the year, the average pretax profit stood at 2.4 percent.

Though the total pretax profit margin was flat in 2013, dealerships did make more money on a dollar basis due to rising vehicle sales and higher overall revenues. The average dealership made $923,248 in net pretax profit last year, up 10 percent from 2012.

Total revenue at U.S. dealerships reached $730 billion in 2013, up 9 percent.

New-vehicle unit sales rose 7 percent, but gross margins on new vehicles continued to decline in 2013, falling to 3.8 percent from 4.2 percent in 2012. Profit per new vehicle retailed fell to $69 last year from $111 in 2012.

Still, the new-vehicle department made a net profit for the third year in a row, after five previous straight years of losses, after adding in profits from aftermarket products and finance and insurance that were attributable to new-vehicle sales.

Used-vehicle unit sales rose 2 percent overall, though retail sales increased more sharply, by 6 percent. Wholesale unit sales fell 3 percent.

Net profit in the used-vehicle department was positive for the fifth straight year. The profit per used vehicle retailed rose to $254 in 2013 from $194 the previous year.

Total sales in service, parts and the body shop rose 5 percent. Total service and parts profits increased 7 percent.


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