Supply and demand in auto retail is so out of whack that franchised dealers have already shattered a profitability record that took all of last year to set.
The average U.S. dealership recorded net pretax profit of $3 million through the first nine months of 2021, more than double the $1.3 million reported through September last year and well above the record $2.1 million for all of 2020, according to National Automobile Dealers Association data.
Dealers are grappling with high demand for cars and trucks and a low supply of them, especially new vehicles, as automakers are challenged with parts shortages, particularly for microchips.
"As long as the auto industry is stuck with low levels of production, the market's not going to right itself," industry analyst Maryann Keller told Automotive News last week. "And what you're getting is dealers are selling cars for full MSRP and sometimes more."
But shouldn't the low level of vehicles available to sell hurt dealerships? Not when you consider the ripple effects of a low-supply, high-demand environment, Keller said.