Dealers learned a valuable retailing lesson during the pandemic: Transparency is vital to establishing trust and satisfaction with customers, and it is key to comprehending the full picture of this industry.
We've called for transparency time and time again in this space, mostly from automakers. But now, it is the National Automobile Dealers Association that must lift a new veil of secrecy.
NADA last month told Automotive News that it has stopped publicly disclosing its average dealership financial profile data. Instead, the data is available only to NADA 20 Groups for consulting and training, and only on a limited basis.
NADA's decision to begin hiding its average profitability data is eyebrow-raising — to put it mildly — given that the change takes place as its members enjoy record profitability.
The association has historically shared data about average sales and profitability, among other metrics, on a monthly year-to-date basis and annually on its website. The profile provided overall figures, plus data by department. It had often been used as a tool to show low profitability on new-vehicle sales and other cost and profit centers. For instance, in the 2018 report, the data identified that floorplan loans reverted back to an expense for most dealers, after becoming a surprising profit center for nearly a decade.
Last year, NADA shared the data from January to October but didn't provide full-year figures. Average dealership profitability in 2021 was expected to easily surpass a 2020 record of $2.1 million, but without transparency, we just don't know. Erin Kerrigan, managing director of advisory firm Kerrigan Advisors, estimated that the average U.S. dealership earned $4.1 million in pretax profit in 2021. She calculated that figure by extrapolating NADA's data through October. NADA's economist would not validate Kerrigan's estimate.
