New Vehicle Department
- Dealers with stronger BDC departments, superior internet presence, and social media capabilities are selling more vehicles.
- Gross profits have increased and, in many cases, doubled.
- Consumers are not price shopping as much.
- Low or no interest rate loans are helping to increase front end gross.
- Inventories are low for certain brands as sales are outpacing production.
- Sales have been better than expected.
Used Vehicle Department
- In March and April, CarMax, Carvana, and larger groups ceased buying used vehicles over concerns in the market. Some dealers took advantage of this to purchase inventory at discounted values.
- In the past few months, this pattern has changed and there is a high demand at auctions and prices have increased.
- Many dealers have low inventories.
- Sales have been better than expected.
Parts and Service Department
- Business was slow in March and April but has recovered nicely.
- Currently, business is steady.
Body Shop Department
- Collisions have declined due to lack of travel, and this has reduced the number of RO’s and sales.
Expenses
- All categories have been analyzed, resulting in many reductions. Prior levels of expenses are not expected to return.
- Staffing levels have been reduced. Most will not return to prior levels of employment.
- Employees are efficient and productive. Weaker staff have not returned to work.
Profitability
- Most dealers lost money in March and April, but the past few months have been surprisingly strong.
- Decent sales volumes with lower expenses has led to healthy profits.
In conclusion, dealers have recovered nicely and are performing well. A lot of lessons have been learned in this difficult period which will benefit dealers in the years to come.
If you have any questions regarding this article, please contact Paul McGovern at PMcGovern@DowneyCoCPA.com or at 800-849-6022.
