Dealer Gross Profits are Down – But They Don’t Have to Be
Why are auto dealers’ gross profits down in the second quarter of this year when compared to the previous three months? According to a recent article in Automotive News, it depends on who you ask. Some believe that it’s due to competition (including the mass-produced import brands), while others might say it’s because of low gas prices, or even the changing taste of consumers across the county.
Whatever the case, gross profits have taken a bit of a plunge. There are five large publicly traded automotive groups in the United States (Asbury, AutoNation, Group 1, Lithia and Sonic). The Automotive News article included four companies’ numbers in the second quarter.
Asbury’s gross profits were down 10%, coming in at $1,865 per new vehicle sold; AutoNation’s gross profits were down 5.3% to $1,905; Group 1 lost 12%, checking in at $1,551; and Sonic’s gross profits tumbled 9.1% to $1,925.
This news comes on the heels of Fiat Chrysler (FCA) increasing the price their dealers pay for cars by 1% – while keeping the corresponding sticker prices the same. This was done in an effort to increase profits at FCA – and it was done at the expense of their dealers.
The Cure for Low Gross Profits
By now, you’re probably ready for some good news … right? Here it is: your profits don’t have to be lower than they should be, just so you can sell more cars. JKR’s clients enjoy the benefits of attracting not only more customers, but better ones, too! If meeting and exceeding your sales goals (and increasing gross profits at the same time) sounds great to you, you need to call us today. Don’t be satisfied with status quo, when there’s something far better out there for you and your dealership. Want to know how we do it? Call Eric Tigner today at (321) 397-0777.
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