Car dealerships across the country are pulling out all the stops to lure shoppers this summer, but it’s not because of weak sales and profits.
New car dealerships grew sales by 10.4 percent in the 12 months ended June 30, 2014. That's slightly higher than the industry's 8.8 percent growth in the preceding 12 month period, though lower than its annual growth for 2011 and 2012, when sales grew 17.0 percent and 13.2 percent, respectively.
Profitability in the industry rose slightly in the most recent 12 months in comparison to the previous three years, with net profit margins averaging 1.8 percent in the 12 months ended June 30, 2014. That was a six-year high and an increase from the less than one percent net profit margins seen in the industry during the recession in 2009 and 2010.
Used car dealers grew sales by about 8 percent in both 2014 and 2013, which is down slightly from the 10 percent and 11 percent growth rates seen in 2011 and 2012, following the recession.
Net profit margins in the used car dealer industry are also strong in comparison to previous years. Used car dealers’ profit margins averaged 4.1 percent in the most recent 12 months, which is also a six-year high and more than double the industry’s 2009 net profit margin of 1.8 percent.
Sales growth and profitability among used car dealerships is higher than for all privately held retailers. Privately held retailers across all product categories had an average 6.2 percent sales growth and 3.4 percent net profit margins in the most recent 12 months, according to Sageworks’ latest private company report.
Car dealerships are among the fastest-growing retail industries in the last 12 months and are the fourth fastest-growing retail segment by sales growth according to the new ranking, below.