News

Average Profits of Car Dealers Rose 48 Percent Despite Pandemic

Average Profits of Car Dealers Rose 48 Percent Despite Pandemic
Autos
While the Canadian Automobile Dealers Association (CADA) has not yet posted its own numbers, the U.S. National Automobile Dealers Association (NADA) is today reporting that car dealers recorded an increase in net pretax profit of 48 percent on average versus 2019.

The 2020 figure of $2.1 million USD also easily beat the previous record of $1.5 million USD achieved in 2015.

NADA Chief Economist Patrick Manzi gave many reasons, starting with increased scarcity for both new and used vehicles.

Except during the first wave of COVID-19, dealer incentives to customers were significantly less generous overall, while on the other hand manufacturer incentives paid out to dealerships for complying with certain performance targets remained roughly the same in 2020 as in previous years.

Consequently, despite the lower sales volumes, individual vehicle profitability rose. The average per-vehicle gross profit jumped 22 percent for new vehicles and 13 percent for used vehicles, according to NADA.

Other contributing factors include expense reduction, staff cuts, acceleration of digital sales, and floor plan gains (on a per-vehicle basis). Let’s not forget the financial support from the U.S. government in the form of a Paycheck Protection Program (the equivalent of the Canada Emergency Wage Subsidy).

While optimistic for 2021, Manzi doesn’t expect profit levels to stay as high. This year will probably be more of a return to normal, he said.
Read more on guideautoweb.com
News Topics :
RELATED STORIES :
Autos
Car sales have taken a huge hit during the first quarter of 2020 and an even bigger one in the month of April due to the COVID 19 situation, but it...
Business
A glut of used vehicles has started to depress prices. That trend will intensify as Americans will return 3.36 million leased cars and trucks this year, another jump after a...
Business
Automakers are offering Canadian consumers the most generous incentives on record as they fight for sales in a fiercely competitive marketplace. Data compiled by J.D. Power Canada shows that automakers...
Business
U.S. sales of new vehicles which set a record of 17.47 million in 2015 could hit a new high in 2016. Consulting firm LMC Automotive and car buying site...
Business
New vehicles stay until theyre sold, says Automobile Protection Association APA president George Iny. Occasionally, they can be put into service at the dealership as an employee vehicle or service...