By Amy Wilson, Crain News Service
DETROIT (May 23, 2104) — Employment at U.S. new car dealerships topped 1 million in 2013, the first time the industry has exceeded that threshold since 2008, early in the recession, according to the National Automobile Dealers Association (NADA).
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.
Employment of 1 million marked 3 percent gain over 2012, NADA reported in its NADA Data 2014 annual report on dealership sales and financial trends, released this week.
The average dealership location employed 57 in 2013, up from 55 in 2012, and had an annual payroll of $3 million, up 3 percent. The payroll total for all dealerships was $53.7 billion last year.
Mr. Szakaly is forecasting light-vehicle sales of 16.4 million in 2014, up from 15.6 million in 2013.
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, Mr. 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,” the economist 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 pretax profit last year, up 10 percent from 2012.
U.S. dealerships’ collective revenue 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 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.
This report appeared on autonews.com, the website of Automotive News, a Detroit-based sister publication of Tire Business.