NADA says average dealership performance improved in 2010

NADA says average dealership performance improved in 2010

Americas franchised dealerships improved their net profitability nearly a full percentage point in 2010, NADA reported this week, but there were still casualties in the dealership ranks.

According to NADAs annual NADA DATA report, net profitability before taxes for the average dealership increased to 2.1 percent in 2010 from 1.5 percent in 2009. New and used vehicle sales (in dollars) per dealership, on average, were up about 19 percent and 21 percent, respectively, in 2010.

The financial performance of new car and truck dealerships improved in 2010 despite a slow economic recovery, said Paul Taylor, chief economist of the National Automobile Dealers Association (NADA).

New-car dealerships on average employed 50 people with an annual payroll of about $2.6 million in 2010, an increase from 2009, Taylor said.

“New-car dealerships improved their profitability in 2010 through strict cost control, such as reducing rent and real estate costs, cutting advertising expenses and maintaining lower floorplan costs, Taylor said. However, the difficult economic recovery and brands leaving the marketplace caused 760 dealerships to close in 2010.

Franchised dealers are major employers and significant contributors to their communities economies, tax bases and civic organizations, Taylor added.

Medium and heavy-duty truck dealerships saw unit sales increase by 9 percent in 2010, as inventories of goods that required transport were rebuilt in a wide range of U.S. industries, the report said.