MCLEAN, Va. — The National Automobile Dealers Association’s annual industry report confirmed that new-vehicle dealers sold 12.72 million units last year, with total dealership dollar sales growing by 10.2 percent to $609 billion.
Sales in the new-car department (up 15.6 percent) surpassed the 9.8 percent revenue growth in used cars. Net pretax profit posted strong gains, with the typical store generating $785,855, according to the association’s NADA Data report.
“Typical dealerships saw sales increases in all departments for the year, led by new-vehicle sales, and costs moderated in relation to new-vehicle sales volume,” the association’s NADA Data report stated.
The industry realized those gains despite last year’s devastating earthquake and tsunami in Japan, which hurt vehicle supplies and slowed economic growth. The unemployment picture improved, but not as quickly as many hoped. Consumer confidence, the report stated, generally trended upward in 2011 and in early 2012.
“In 2011, vehicle sales continued to increase, driven by the need to replace a record-aged group of vehicles in service,” the report concluded.
Total gross margins moderated slightly in 2011 to 14.4 percent of total dealership sales from 14.5 percent in 2010. “With economic recovery continuing at a slow pace, the 2011 operating profit increased to 1.2 percent of sales from 1 percent,” the report stated.
Total expenses reflected ongoing growth in the overall U.S. economy, up 8.9 percent, but declined as a percentage of sales to 12.1 percent from 12.5 percent in 2010. Advertising expenses increased on higher unit sales, but fell on a per-vehicle basis to $628.
Total dealership net profit before tax as a percent of sales was 2.3 percent, up from 2.1 percent in 2010. Dollar profits gained 24 percent.
“Economic recovery and strong new-vehicle sales in 2011 helped the gross margin on the sale of new cars and trucks increase to 4.57 percent in 2011 from 4.49 percent in 2010,” the report stated.
Looking at F&I, aftermarket income rose in 2011 behind increases in F&I and service contract dollars. The F&I penetration rate, according to the report, rose to 77 percent for new cars. Acceptance rates for service contracts on new-vehicle sales rose by 0.7 percent, while the rate for used-car sales increase by nearly 3 percent.
“New light-duty sales of 12.7 million units in 2011 were 10.2 percent higher than in 2010,” the report stated. “Rising gasoline prices pushed the mix of new-vehicle sales toward a greater percentage of cars in late 2011 and early 2012. New-vehicle sales should rise by more than 10 percent in 2012, as vehicle supply increases.”
To view the full report, click here.