Dealers' profit margin unchanged
DETROIT — The average profit of the nation’s auto dealers rose 6.7 percent last year to nearly $1.1 million, but the average profit margin remained at 2.2 percent, the same level it has been since 2012, according to the annual report from the National Automobile Dealers Association.
But to achieve that profit margin dealers are relying more than ever on used car sales and their service and parts departments, both of which are more profitable than selling new vehicles, the report showed.
“Total dealership gross margins fell for a fifth year in a row to 13.1 percent of total dealership sales from 13.4 percent in 2013,” NADA chief economist Steve Szakaly wrote. “While total expenses were up 4.7 percent, productivity gains and increased throughput (sales) helped to ensure that expenses declined as a percentage of sales to 10.9 percent from 11.2 percent in 2013.”
Sales from parts and service jumped 8.4 percent to $91.7 billion, fueled by a record wave of recalls, particularly by General Motors.
