The annual study done by the National Automobile Dealers Association has found that last year was the best ever for auto dealership profits, and that’s not even the best news. All signs point to 2013 ending even better.
In 2012, pretax profits at the average U.S. dealership rose 6 percent to $843,697 in constant 1982 dollars, which according to the Labor Department’s Bureau of Labor Statistics is $2,036,632 in today’s currency. Additionally, there were the highest net profits in the new-vehicle department since 2004, and new light-vehicles are rising towards a possible 16 million units sold, making NADA chairman and owner of Westcott Automotive, David Westcott, optimistic about this year’s profits in an overall good economy.
Net profit for new vehicles was in the red from 2006-2010 (the longest losing streak on record – which I imagine is all the way back to when cars were invented), and 2011 was the first year it broke back through the 0 line into the profit section. From $23 thousand in 2011 to $111 thousand in 2012, this is a major gain since 2009 reported a net loss of $180 thousand.
However, Westcott sees two major “clouds” on the horizon. The first being the uncertainty surrounding the impact of the Affordable Care Act, and the second being possible future regulation of lenders, which could hurt profits in the areas of finance and insurance for dealerships. Regarding the Affordable Care Act, the Obama administration has delayed implementation of changes, so that blows one of the clouds of worry away for another year.
Not only is this news great to hear for car dealerships, but also from an advertiser’s standpoint as well. When dealerships make money, so do we. If they aren’t making money, they won’t spend as much on advertising. Now with these gains reported during the last two years, as well as the predicted continuous growth, I would think dealerships would want their name out there even more.
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