2021 has been a unique year as it relates to new vehicle sales. Nationally, 2021 unit sales surpassed those of 2020 by over 11%, but still lag behind unit sales of 2019.
New Unit Sales Volume
- Unit sales for our dealer clients rebounded from 2020 with over 70% showing an increase in unit sales. However, over 52% sold fewer units than they did for the same period in 2019.
- Our dealer clients exceeded the national average, reporting an increase in unit sales year over year of 13%.
Profits on Vehicle Sales
- Fueled by the increase in unit sales, limited availability, and increased demand, virtually all of our dealers experienced growth in gross profit dollars.
- Our results indicated that dealers, on average, nearly doubled their overall gross profit percentage rising from 3.22% in 2020 to 6.22% in 2021.
F&I Income
F&I Income continues to be a profit center for dealers over the past number of years.
- Over 75% of dealers reported an increase in F&I income per unit sold.
- Dealers saw F&I income increase a whopping 20% over last year.
Profitability – By the Numbers
| 2021 | 2020 | 2019 | |
| Gross Profit/Vehicle | $2,796 | $1,432 | $1,182 |
| F&I Income/Vehicle | $1,244 | $1,053 | $950 |
| Combined/Vehicle | $4,040 | $2,456 | $2,132 |
The combination of the computer chip shortage that has limited the supply of new vehicles along with the continued demand by consumers has been a boon for dealers. In recent years consumers have held the upper hand in negotiations with the dealer which led to shrinking margins. Dealers would sell vehicles at slim to no margins and try to make up for the lack of gross with F&I and future parts and service business. This inventory shortage will not last forever. Dealers should be aware of this and manage their new vehicle department accordingly.
If you have any questions regarding this article, please contact Charlie Paolino at CPaolino@DowneyCoCPA.com or at 800-849-6022.
