The run-up in new-vehicle sales is helping the average U.S. dealership return to a more normal business model after depending on fixed operations and used-vehicle sales to weather the automotive depression.
Revenue from used vehicles and parts and service rose again in 2011 but accounted for smaller shares of total revenue at the average dealership because new-vehicle revenue expanded at a double-digit rate compared with 2010.
That's based on data in "NADA Data 2012," a report released June 11 by the National Automobile Dealers Association. It's the group's latest state-of-the-industry report on dealership financial trends.
NADA's data show a 16 percent increase from 2010 in new-car sales revenue, to $18.9 million. That helped push total dealership sales to $34.7 million, a 12 percent jump from 2010. The average dealership's pretax profit rose 24 percent last year, to $785,855.
But some dealers are reluctant to slack off on service business and used-car sales for fear the bounce in new-car sales is temporary.
"We're having some smaller increase in new-car sales -- the swing from 2010 to 2011 was huge," says Morrie Wagener, owner of Morrie's Automotive Group in Long Lake, Minn. "Our used-car business is still growing but at a slower pace from last year. That's offset by the new-car volume. But I think it is economy-driven and market-driven."
Wagener sells about 16,800 new and used vehicles a year. His new-car sales are up 10 to 14 percent through May compared with the year-ago period, he says. Used-car sales are up about 20 percent, he says.
According to NADA's report, new-vehicle revenue at the average dealership last year rose to $18.9 million, or 54 percent of total dealership sales, from $16.4 million, or 53 percent, in 2010.
Used-vehicle sales, as a percent of total sales, dipped slightly, from $11.2 million, or 32 percent of total sales, to 10.2 million, or 33 percent.