Dealerships had reported an average pretax net profit of $1.36 million in 2018, reflecting a growing reliance on automaker incentives, which are excluded from operating results. Average pretax net profit rose 4.8 percent to $1.42 million in 2019.
The average dealership's gross profit in 2019 was $7.06 million, up 2.5 percent. Used-vehicle revenue rose 3.3 percent, and fixed operations revenue rose 4.5 percent from 2018.
Dealership employment again topped 1.1 million workers, according to a separate report, NADA Data 2019, the latest iteration of the association's annual profile of U.S. franchised dealerships, which was released last week. Dealership employees were paid more than $68 billion in wages last year.
Total advertising spend for dealers slid slightly in 2019, continuing a trend of ad-dollar cutbacks. Advertising is an easy area to slash as dealerships tighten expenses and receive fewer automaker advertising incentives.
The amount of ad dollars dealers spent per new-vehicle retailed reached new heights in 2019, rising 2.6 percent to $640 per car. That is the highest NADA has recorded. Patrick Manzi, the group's senior economist, told Automotive News he believes the share of ad dollars devoted to online channels — 56 percent in 2019 — will grow this year.
It won't likely "be a huge jump to something like 90 percent of all ad spend, but rather something more along the lines of 60 percent," Manzi said in an email.
The increased digital focus is significant, particularly as the COVID-19 outbreak restricts in-store vehicle sales and spurs increased focus on digital transactions for retailers nationwide.
