Dealers’ new inventory levels remained markedly higher than last year through the first four months of 2005 while average net profits decreased for large and mid-size retailers, according to consulting firm Spader Business Management.
The trend reflects the continued impact of a soft motorized market that surfaced late last year and persisted in early 2005, driving manufacturers to implement discounting to help move product.
However, industry insiders note that May and June are traditionally strong retail months which could help correct inventory levels and increase margins.
Average new inventory levels ranged from 18% to 19% higher than 2004 through April, including:
* Larger dealers, defined as those with annual income over $10 million, showed a 19.4% increase in new inventory levels over last year, rising from an average $4.2 million in 2004 to nearly $5 million.
* Mid-size dealers with annual income between $5 million and $10 million grew new inventory levels by 17.7% compared to 2004 to an average of $2.15 million from $1.8 million last year.
* Smaller dealers, those with annual income less than $5 million, showed new inventory levels 18.7% higher than last year, increasing from an average of $985,615 to $1.17 million.
All dealer levels posted an average net profit for the first four months, but the smaller dealer sector was the only category to gain on last year, increasing 57.9% to $22,111. For the period, larger dealers showed an average net income of $233,438, down 15.2% from 2004, while average profits for mid-size dealers declined 26.7% to $60,695.
Other highlights for the first four months include:
* Total sales at larger retailers were up 6.3% to an average of $6.4 million from $6 million in 2004.
* Mid-size dealers showed a 2.4% gain in total sales over last year to an average of nearly $2.4 million compared with $2.3 million.
* Smaller dealers increased total sales 6% from 2004 to an average of nearly $1.2 million from $1.1 million.