For Downey & Company’s annual trends and analysis newsletter, we have elected to provide you the results in a series of articles, each one focusing on a dealership’s major line of business. Part one will focus on new vehicle sales. The analysis is broken down overall and by dealership total sales volume. The data was compiled from our client dealer results for the first nine months of 2014.
New Vehicle Sales Dollars and Units
| Percentage of Dealerships Who: | Total Dealership Sales | |||
| Overall | < $20 Million | $20-$30 Million | >$30 Million | |
| Increased New Vehicle Sales Dollars | 74% | 77% | 80% | 64% |
| Increased New Vehicle Unit Sales | 70% | 65% | 73% | 73% |
As detailed above, a significant number of dealerships increased both their overall sales dollars and units on new vehicles. Interestingly, the percentage of increase in sales dollars is not consistent with the percentage increase in unit sales. This can be attributed to consumers purchasing pricier models (ex. Honda EX vs. LX) including higher priced SUVs and trucks.
| For Dealerships Who Experienced Increases: | Total Dealership Sales | |||
| Overall | < $20 Million | $20-$30 Million | >$30 Million | |
| Average Percentage Increase in Units Sold Over Last Year | 16.9% | 16.6% | 15.7% | 19.0% |
| Average Number of Units Increased | 60 | 30 | 51 | 113 |
As we would expect, the average number of additional units sold by dealerships who increased their unit sales would be lower for smaller dealerships than it would be for larger ones. However, on a percentage basis, the size of the dealership had little effect as to the year over year percentage increase, meaning smaller dealerships are doing as well as larger dealerships in increasing new vehicle sales.
Profitability
| Total Dealership Sales | ||||
| Overall | < 20 Million | 20-30 Million | >30 Million | |
| Average Gross Profit Percentage per Vehicle | 3.39% | 3.59% | 3.48% | 2.96% |
| Average Gross Profit Dollars per Vehicle | $1,038 | $1,126 | $1,081 | $841 |
| Average Change in Gross Profit Dollars per Vehicle | $(47) | $(96) | $(40) | $79 |
| Percentage Who Increased Gross Profit Dollars per Vehicle | 39% | 23% | 33% | 64% |
| Percentage Who Increased Gross Profit Dollars >$50 | 33% | 18% | 27% | 64% |
Note: This chart excludes F&I income and dealer documentation fees.
Average gross profit on both a percentage and dollar basis falls in line with what we typically expect. Larger dealers are willing to cut margins in order to move vehicles since they make up the difference in volume. Even with lower margins, larger dealers were, on the whole, able to increase the gross profit per vehicle. Both small and medium sized dealerships were not as fortunate as over 80% of the dealers in these categories saw margins decline from the comparable period.
The results confirm what we have surmised from our conversations with dealers. New vehicle sales for the most part have been steady and it continues to be a struggle for dealers to hold margins.
If you have any questions regarding this article, please contact Charlie Paolino at CPaolino@DowneyCoCPA.com or 800-849-6022.
