Dealers made less profit per unit in first-half 2017, says NADA

In the first half of 2017, dealers made slightly less profit per vehicle, including new and used, according to a midyear report from NADA. Still, the service department is thriving and dealership employment is at a record high.

“Profits are down slightly, as is gross,” said NADA Chief Economist Steven Szakaly, “particularly the front end.”

Dealership net profit before tax edged down to 2.5 percent this year from 2.6 percent in 2016. The average retail new-vehicle selling price rose a bit to $34,335. Retail net profit per new vehicle retailed continued its downward slide, to –$396. Even used-vehicle sales, normally a stalwart of the sales department, were less profitable this year, with retail net profit per used vehicle retailed at $116, down from $228 last year.

There’s brighter news in the service department. Partly because of the downward trend in sales, service, parts and body shop sales made up more than 12 percent of total dealership sales, up slightly from last year. Warranty work was up to 18.8 percent of total service, parts and body shop sales – not surprising with all the recalls.

Total dealership sales are high. In the first half of the year, total dealership sales in Maryland were nearly $9.6 billion, for an average of nearly $32 million per dealership. In Virginia, total dealership sales were nearly $11.5 billion, with an average of $25.1 million per dealership. Nationwide, dealership employment keeps climbing. Franchised new-car dealerships directly employed 1.1 million workers through the second quarter of 2017, the report said.

“We expect to see employment at new-car dealerships reach an all-time high at the end of 2017,” said NADA Senior Economist Patrick Manzi. “In addition to direct employment, more than another million other jobs in local communities are dependent on dealerships.”

And dealership jobs pay well. In Maryland, the average annual salary of dealership employees is $58,604. In Virginia, it is $57,876.

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