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Dealership Profits Rising

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DETROIT (WWJ) – A new report shows that car dealers are making some pretty good profits, and the money isn’t coming from selling new cars.

WWJ AutoBeat Reporter Jeff Gilbert reports that the new car part of the business won’t be a profit center again until sales pick up significantly. But, the National Automobile Dealers Association’s annual report detailed in Automotive News, says dealers are making money on finance, service and on used cars. It’s enough that their profit margins are hitting levels not seen in 25 years.

Dealers have also been helped by lower costs and less competition. There are about 760 fewer dealerships today than there were a year ago.

From 2010 to 2011 the average dealership profit rose sixty per cent, to top $642,000.

The losses on new cars have been narrowed a bit to an average of $180 per vehcile.. The NADA report says for dealers to routinely make a profit on new vehicles, the sales rate has to top 16 million. That’s not projected to happen until the middle of the decade.

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