“Dealership profit continues decline, but dealers have opportunities to bring their variable expenses more in line with lower margins”
While the average U.S. dealership’s profit slide has continued through the first six months of 2024, the decline is showing signs of leveling off. It remains to be seen whether the industry’s Great Normalization journey is nearing its end, but the slowdown in that earnings falloff is a positive signal.
Profitability for the typical franchised dealership continues to be above the norms seen before the onset of the coronavirus pandemic in 2020, but it has declined roughly 50 percent from its peak in 2021. It’s important, however, to view these results with a focus on brand and geography. Dealerships representing certain brands continue to operate at an elevated level, while stores representing other brands have seen performance revert to levels closer to their historical norms.
What is now clear — and troubling — is that many dealers aren’t acting quickly enough to rein in expenses that rose during the heights of the pandemic profit boom. With this report, the Presidio-NCM Average Dealership Performance Benchmark is providing some new visibility into dealership expense data that makes that clear. The average dealership has seen its variable gross profit plunge 32 percent since 2022, but its total personnel expense, for instance, has dropped by just 6 percent during the same period.