The overriding theme for 2023 with regard to new vehicles has been the recovery in new vehicle inventory for most brands. It is still uncertain how the recently settled strikes at the Big 3 will affect inventory levels.
Overview
Virtually all manufacturers are reporting gains in the number of units sold compared to 2022. Analysts now project new vehicle sales for 2023 to be in the 15.3-15.4 million range. While a marked improvement over the past three years, it is still well below pre pandemic levels.
A Closer Look at Our Dealer Client Results
| 2023 | 2022 | 2021 | |
| Gross Profit/Vehicle | $3,117 | $4,390 | $2,796 |
| F&I Income/ Vehicle | $1,307 | $1,413 | $1,244 |
| Combined/Vehicle | $4,424 | $5,803 | $4,040 |
New Unit Sales Volume
- 60% of our dealer clients reported an increase in unit sales, but only 38% had gains >10%.
- On average, unit sales for our dealer clients increased just over 5%.
New Vehicle Profitability
- Nearly 87% experienced a decline in their new vehicle gross profits dollars and on a per unit basis. Vehicle costs have increased and with greater supply dealers are no longer able to charge a premium.
- While margins and gross profit per unit have declined from 2022, they still exceed pre pandemic levels by a significant amount.
F&I Income
- The strong results previously generated from F&I have begun to diminish.
- Over 67% showed a drop in F&I income on a per unit basis.
Summary
Sales and gross profits have begun to retreat towards historical ranges. Many buyers are focused on monthly payments and how it fits in their budget. Monthly payments have skyrocketed with rising interest rates. This has a residual effect on F&I products as typically their cost is rolled into the financing. Dealers will need to adjust their expectations on sales and profitability as the market returns to more realistic levels.
If you have any questions regarding this article, please contact Charlie Paolino at CPaolino@DowneyCoCPA.com or at 800-849-6022.
