The auto retail business is red hot and getting hotter as dealership profits continue to rise. And, according to an Automotive News report, it’s no wonder everyone wants in.
In 2013, the average U.S. dealership produced return on equity of 29%, according to the National Automobile Dealers Association (NADA). That figure has risen in four of the past five years and is now more than double the 12 percent return recorded in 2008 when U.S. vehicle sales collapsed.
“Those who have dealerships want more, and those who don’t have a store become increasingly interested in that dealership opportunity,” said Alan Haig, president of Haig Partners, a dealership buy/sell advisory firm in Fort Lauderdale, Fla.
Dealerships also are enjoying record profits, according to the newly released NADA statistics. The average store made $923,248 in net pretax profit in 2013, the highest noninflation-adjusted amount since NADA started tracking the data in 1970. That’s the third straight record year. The net pretax margin was 2.2 percent in 2013 and 2012. That’s barely down from 2.3 percent in 2011, which was the highest that NADA had seen since at least 1978.
“You have a much smaller number of dealers, post-global financial crisis,” said Steven Szakaly, NADA’s chief economist. “Now these dealers are selling more vehicles per dealership, which is helping your return on equity.”
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