McLEAN, Va. – The financial performance of new car and truck dealerships improved in 2010 despite a slow economic recovery, according to Paul Taylor, chief economist of the National Automobile Dealers Association (NADA), in the trade group’s latest report on the state of the industry.
New-car dealerships, on average, employed 50 people with an annual payroll of about $2.6 million in 2010, an increase from 2009, according to "NADA DATA 2011," an analysis of the U.S. car and truck industry with an emphasis on auto retailing.
"New-car dealerships improved their profitability in 2010 through strict cost control, such as reducing rent and real estate costs, cutting advertising expenses and maintaining lower floor plan costs,” Taylor said. “However, the difficult economic recovery and brands leaving the marketplace caused 760 dealerships to close in 2010.”
Total franchised dealership service, parts, and body shop sales reached nearly $78 billion in 2010, and sales by the typical dealer were up by 5.2 percent, as many car owners drove their cars and trucks longer. NADA reports that dealerships faced increasing competition from independent service centers and quick-lube centers, but dealers continue to attract customers with competitive pricing and upgraded facilities. Last year’s service sales were powered by stronger light-vehicle sales in addition to continued recall activity for some makes and service needed for the aging vehicles.
New vehicle dealers have made a major investment in service and parts to increase sales and customer satisfaction, according to NADA. To boost customer convenience and make full use of their facilities, 78 percent of dealers offer evening service hours, weekend hours, or both. The average dealership service department is open for business 56 hours per week.
In recent years, more dealerships have opted to remain out of the body shop business. NADA Industry Analysis estimates that just 33 percent of new-vehicle dealerships had body shops in 2010, down from 2009. Auto bodywork performed by all new vehicle dealerships remained at just over $6.4 billion in 2010, down from about $6.6 billion in 2009.
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