About 40 percent of survey respondents said cost cutting is behind them, while 42 percent said they expected to trim expenses in 2021.
One dealership executive chalked up his optimism for 2021 to restructured pay plans and the care he'd taken to rehire only his strongest sales employees. Jack Daniels Motors in New Jersey subsequently had its best-ever year in 2020, CFO Ronald Dubin said.
Strict shutdown orders in the state prompted the five-store group to trim sales staff to a skeleton crew. When sales roared back in May, Dubin took the opportunity to overhaul the entire department.
"We brought back the cream of the crop," he said. "We redid every pay plan in the company and realigned it towards profitability."
John Pitre, dealer principal of Motor City West in Bakersfield, Calif., said he adopted shorter business hours that required only one shift per day instead of two.
Supervising half as many employees allowed managers to become more efficient.
"Our people got better. Our processes got better. We eliminated unnecessary steps and unnecessary vendors," Pitre said. "That streamlining has allowed us to be more efficient in not only our pricing but our delivery of services."
Survey respondents said they see the most opportunity for profit growth this year in used-vehicle sales, followed by service and then new-vehicle sales.
Nearly one-third said they plan to hire to expand dealership head count this year.
At Harbin Automotive, a two-store group in Scottsboro, Ala., used-vehicle sales jumped 85 percent last year, said Tom Vosen, the stores' general manager.
When the industry rebounded, demand rapidly eclipsed supply in both used and new.
"Especially in the last half of the year, we were selling off the [delivery] truck," Vosen said.
New-vehicle inventory levels remain a wild card in 2021.
More than a third of respondents expect them to be back in line with demand by the end of June. Another quarter don't expect that to happen at all this year.
Cox Automotive's Smoke estimates supplies won't normalize until next year. That will continue to both help and harm dealerships, he said.
"The bad news is, it's certainly going to be more challenging to have the inventory to support dramatic increases in volumes," Smoke said. "The good news is, it creates much of that very strong pricing power that directly related to the improvement in margins experienced in both the new and used markets."
Randall Hebert, dealer principal of Mountain View Chevrolet in Chattanooga, said he sourced inventory during the early weeks of the pandemic from dealerships closed by government orders. But those stores aren't selling to other dealers any longer.
"The factory still has the same problems that they had before," Hebert said. "They have never been able to ramp production back up."