It's no secret that new vehicle inventories are still way down. It's also no secret that limited supplies have driven prices higher. Everyone is well aware of widespread dealership markups, but with fewer vehicles to sell, are these companies facing the same financial concerns as automakers? The answer appears to be a gigantic no, printed in capital letters with an exclamation point to boot.
Data for the first three months of 2022 shows dealerships aren't just surviving, but thriving at a record level. A recent report from Haig Partners takes a deep dive into data for the retail automotive market, and the takeaway is obvious. The average gross profit per new vehicle sits at $6,244. That's a whopping 180 percent increase from pre-pandemic levels in 2019, and with supply chain problems still a major issue due to COVID-19 and the chip shortage, the trend is expected to continue through this year at the very least.
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The skyrocketing per-vehicle haul is the driving force behind record-setting dealership profits overall. The report estimates that publicly-owned new-car dealerships scored an average profit of $7.1 million over the most recent 12-month period, ending in March 2022. That represents an increase of 242 percent compared to the pre-pandemic world of 2019, and it shows that buyers have cash and are willing to pay over MSRP to get the vehicle they want. As long as record fuel prices don't spiral the economy into recession, this trend could endure for possibly two or three years.
The report also highlights how the value of dealerships has risen. With record profits being made, business-minded folks are keen to grab a piece of the pie for themselves. Public companies bought 216 dealerships in 2021, which represents a whopping 645 percent increase compared to the average of the previous five years. Private buyers bought 424 dealerships according to the report, a 34 percent increase versus pre-pandemic levels.