Dealers on average lost money on operations last year for the first time in at least a decade, leaving the retailers more dependent on automaker incentives for profits.
In 2018, U.S. light-vehicle dealers reported an operating loss for the first time since the National Automobile Dealers Association began tracking the data in 2009. Dealers are still reporting pretax net profits, but those are largely driven by automaker incentives, which are excluded from operating results.
Operating results swung to an average loss of $13,338 last year, compared with a gain of $91,774 in 2017, according to the NADA Data 2018 report, the annual financial profile of U.S. franchised new-vehicle dealerships from NADA. Net pretax profit slipped 2.6 percent to $1.36 million.
The gap between net and operating results is widening, indicating greater reliance on factory incentives. In 2017, net profit was 15 times greater than operating profit, which was still in the black. In 2016, net was 5.3 times greater than operating profit, and in 2015, it was 3.1 times greater.