U.S. auto dealers managed to claw their way back from the COVID-19 pandemic and post record profits in 2020, with average dealer earnings climbing nearly 50 percent year-over-year.
According to Automotive News, U.S. auto dealers posted an average pre-tax profit of $2.1 million in 2020, a 48 percent increase from 2019. The National Automobile Dealers Association, which tracks dealer earnings in the U.S. annually, said the average store cut operating expenses by 5.6 percent in 2020, in part thanks to lower vehicle inventories and staff cuts. Average individual vehicle profitability also rose last year.
Many U.S. dealerships also took out federal loans from the Paycheck Protection Program in 2020, although NADA said that it could not tell how these payments may have contributed to dealerships profitability.
NADA Chief Economist Patrick Manzi told AN that he expects dealership profitability to return to normal levels in 2021 once the outlier effects of the COVID-19 pandemic have worn off. As dealership inventories return to normal levels and in-person customer transactions ramp back up, so will store operating costs.
For General Motors, many of the dealership sales tactics that it put in place during the COVID-19 pandemic are set to continue. The automaker relied more on its Shop. Click. Drive. webpage to help customers find GM vehicles at dealerships near them during the pandemic and it expects this online shopping trend to only get more popular in the coming years. The Shop. Click. Drive. page can now process more of a vehicle transaction online, driving sales to dealerships whilst also making it easier for customers to find and buy a GM product.
“We have something called Shop, Click, Drive, which we’re seeing has like a 50% increase in traffic going on,” GM marketing boss Deborah Wahl said last year. “That is enabling larger parts of the purchase cycle to happen remotely.”
GM is also using live streams to give customers a dealership-like experience from the comfort of their own home. It launched Cadillac Live in the U.S. in 2019, which allows users to book an appointment with a Cadillac representative equipped with a tablet, gimbal and headset microphone. The rep can walk the customer around the showroom and show them the brand’s various products and their features. It is also expanding the service to Chevrolet with a similar offering called Chevy MyWay.