Selling all the new cars and trucks that U.S. dealers are now moving has to have an impact, sooner or later, on the real cash streams of the retail business -- used cars and repair work.
But not just yet.
October books closed with a seasonally adjust selling rate of 18.2 million auto sales.
All good news.
But just to point out the sand in the ointment, where does this torrid pace leave used-vehicle demand? For the past few years, franchised car retailers have been stepping up their used game like never before, elbowing their way into territory they have long ceded to independent lots and buy here/pay here operators.
But where is the point, with nearly 30 million 1- and 2-year old vehicles on the roads at this moment, when the franchise dealer’s high-margin used-vehicle and repair and service revenues begin to soften?
Dollar-wise, the average dealership’s service and parts business increased by about $212,000 in August, the most recent month for which the National Automobile Dealers Association has tallied financial data, compared with August 2014.
But as a share of the dealership’s revenues, it actually declined just a tad for the month -- 11.2 percent of the total, vs. 11.3 percent a year earlier.
Average used-vehicle revenues rose by about $707,000 from a year earlier, according to the NADA data. But as a share of the dealership’s business, they barely moved from a year ago.
IHS Automotive forecasts that the great bugaboo of the industry -- the ceaseless aging of the American vehicle fleet -- is starting to slow down. It’s still getting older, but not like it was. Between 2007 and 2014, the population of U.S. vehicles on the road aged by 15 percent. Between now and 2020, it will age by just 3 percent, IHS calculates.
But there is a pearl in this oyster, IHS points out. The population of old-old cars -- 16 years and older clunkers, in other words -- is going to boom. The forecasters believe that by 2020, that population will reach 76 million, more than twice what it was in 2002.
All of them needing radiator flushes and new brakes.
Dealers might want to keep that in mind as the new-car sales side of the house consumes their attention over the next couple of years.