MCLEAN, Va. — A rebounding U.S. economy and rising auto sales are having a positive impact on the employment outlook at franchised new-car dealerships across the country, according to the National Automobile Dealers Association.
According to the group’s NADA Data 2014 report, which contains dealership sales and financial trends, employment at U.S. franchised dealerships topped one million people last year after falling during the recession in 2009. The exact count in 2013 was 1,008,800 people employed, up 3.4% from the previous year.
New-car dealerships employed an average of 57 people. Average payroll in 2013 was $3 million, up 3% from the prior year. Total payroll for all new-car dealerships in the U.S. last year was $53.7 billion.
“The economic recovery is continuing, and we expect a stronger housing market, improving job prospects and continued low interest rates for auto loans to boost sales this year,” said NADA Chief Economist Steven Szakaly.
New-car dealerships, on average, had a net, pretax profit of 2.2% in 2013 — unchanged from the previous year. As a percentage of total sales, the 2.2% figure represents sales in the new- and used-vehicle departments and service-and-parts sales. New-car dealerships, on average, posted a net, pretax profit of $923,248, up 10.5% from the prior year. Total revenue at new-car dealerships reached $730 billion in 2013, an increase of 8.8%.
“Profitability at new-car dealerships remained flat in 2013,” Szakaly noted. “Fierce price competition — whether from online research, a network of competing franchised dealers or compelling new vehicles — continues to dominate an industry with slim retailing margins.”
Gross margins on new-car and light-truck sales continued to decline in 2013 — falling to 3.8% from the previous year.
Sales in the service, parts and body shop at new-car dealerships increased 4.8% in 2013. Warranty work performed by new-car dealers totaled $14.4 billion in service and parts last year — all at no cost to the customer.
New-car dealers spent $7.6 billion on advertising in 2013, up 6.1%. Dealerships, on average, spent 33% of their advertising dollars on Internet ads, up from 26.5% the previous year. Television advertising accounted for 21% of dealership spending, a slight increase.
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Originally posted on F&I and Showroom