Dealerships are relying even more on automakers' incentive money to turn a profit, rather than on day-to-day operations, an annual report on dealership finances from the National Automobile Dealers Association showed.
The average U.S. light-vehicle dealership had a total operating profit of just $91,774 last year, and a net profit of $1.4 million, the NADA Data 2017 report found. Net — which included those incentive payments — therefore was 15 times greater than operating profit, up from a 5.3 times difference in 2016 and a 3.1 times difference in 2015.
"Dealers are more and more reliant on that below-the-line money every month. They're really chasing those factory incentives," said Patrick Manzi, senior economist for NADA. "When we get these monthly sales numbers, we don't always see all that incentive money, but it does get tacked on into net profit."