The automotive market is undergoing a period of rapid change, with dealer inventory, deliveries, production, and demand all in flux. One of the results of the current market climate is that dealerships are racking in record profits from new vehicle sales.
According to a recent report from J.D. Power, profit per unit sold is reaching a new high, driven by strong demand and diminishing incentives for new vehicle sales.
“Total retailer profit per unit, inclusive of grosses and finance and insurance income, are on pace to reach an all-time high of $4,260, an increase of $2,230 from a year ago and the first time higher than $4,000,” states the president of the data and analytics division at J.D. Power, Thomas King. “Grosses have been above $3,000 for three consecutive months. Coupled with the strong retail sales pace, total aggregate retailer profits from new-vehicle sales are projected to be $5.1 billion, the highest ever on record and up an astonishing 216 percent from July 2019.”
According to King, the month of July is shaping up to become the third consecutive month wherein aggregate retailer profits for new vehicles sales will surpass $4 billion.
In addition, the high pricing and profitability for new vehicle sales is paired with high prices for used vehicles as well. Per a recent report from Cox Automotive, the average used vehicle price listing was set at $25,101 by the end of June, a 26-percent increase year-over-year, and a 29-percent increase compared to the 2019 calendar year.
Now, according to J.D. Power, new vehicle sales, including retail and non-retail transactions, are expected to hit 1,319,300 units, an increase of 2.7 percent year over year. However, that figure is also a 12.4-percent decrease compared to July of 2019 when adjusted for selling days.
“Inventory constraints, and its divergent effects on vehicle sales, continues to be the key theme for July,” said King. “Too few vehicles in inventory mean the sales pace in July is well below the levels seen earlier this year. Conversely, the lack of inventory is driving the price of the vehicles to record highs as manufacturers and retailers continue to dial back discounts.”
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Comments
I’m thankful I can afford to wait.
The question is until when?
They will continue to move the goal posts. We have a LONG 18 months at least until we have a Chance of some normality.
I’ve got 3 cars I can choose to drive from.
I have no problem waiting out this crazy car market for 10-15 years
If inflation keeps going up it will be sooner than later as people will stop buying some things. However until the new manufacturing plants by Intel and Apple get online in the US, it might be until 2023 things get back to normal.
This just screams housing market of 2006.
But unlike houses when the car market crashes it won’t come back up. So the fools overpaying now are just throwing money away.
My Cadillac Dealership is closing tomorrow in Augusta, GA. and I do not know about the one in Aiken, SC. Such a pity since I have been buying Cadillacs from them for over 40 years. They are doing this because of the very large requirements from GM for the change to electric vehicles. How long is it going to take to get batteries that will go over 300 miles and how long to have enough places to charge your car. I do not like it. I might have to keep my new GMC Yukon longer than my normal 3 years.
you’re in great shape Billy, that Yukon is good for at least 300K miles
Looks like Cuba here we come. They are known for their old American cars. GM is the new Sears. Bad business decisions will ultimetely be their demise. The only thing they’ll be selling will be pick-up trucks. I doubt fleet owners will succomb to the “EV Craze” for quite a while.
Except there are no artificial barriers like embargos/sanctions that prevent the good to come.
Hey Frank,
I think you’re lost. Try the Toyota website. AARP
While this article may be true, what it is not stating is that dealers are making money/profit on VERY FEW VEHICLES IN INVENTORY!! Yes, it is nice to be a seller’s market for a change, but the fact is huge grosses never trump volume in the long run. How many customers have dealers lost due to low or no inventory? The news pumps up the news about the gross and profit, about how dealers should be deliriously happy about the current situation and how great our profits are…don’t hear much about the loss of customers and revenue lost from those.
I don’t get it, I read about the options, colors and trims they are canceling. This just makes us buyers having to go into a higher trim level most of the time costing us more money or going to a different brand all together. I was at a GM dealer looking to replace a lease vehicle. I was told due to the shortage of vehicles and the chip shortage my new vehicle was going to cost me more. I couldn’t even test drive the vehicle because it was still on the boat coming from Korea. Say what !!!
Get way less for way more!! My 2019 silverado and my 2019 stingray are becoming more and more beautiful each day.
of course they are, your selling over priced Chevrolets. Quality about the same.
Paid MSRP for my 2021 Camaro LT1 but got $40K for my used 2020 Camaro 1SS. The LT1 was exactly what I would have built to order in 2022. Luckily it came to a dealer 100 miles from me in June built in February. One of a few waiting on chips. I didn’t want to wait and risk not being able to order or not get exactly what I wanted with the chip shortages and plant shutdowns.
The problem here is, GM, for example, will likely never catch up building ICE pickups and so the price won’t come back down. Their transition to electric will occupy the factories and resources and we will be forced to buy them because that’s all that will be available and the government will push that along with electric vehicle incentives. These high pickup prices now are to finance the development of electrics and to get the market used to the higher price of electrics. IMO
This headline doesn’t surprise me. I had been shopping around knowing the value on my trade in was very close to loan payoff. I went to the local GMC/Caddy/Buick dealership in town that seemed to have a lot of inventory. I have full-GM discount, but was told by the salesman that they weren’t honoring any discounts. If you had full-GM, they weren’t going to charge you over sticker. If you only had friends & family, you were going to pay some mark-up. If you had nothing, then they were charging anywhere from $3K to $15K markup on their new car lot. They did not want to try and beat another local dealer in town on my trade number and they wanted a $2000 deposit just to run my credit and quote numbers. I asked why and was told that they have the most inventory in town, so they are driving the bus in a sense. I went down the street and picked up a new Jeep from a dealer that was willing to not only give me what I wanted for my trade, but they were offering discounts just to have the best deal in town. Then, another person in my family decided they were going to get a new Jeep as well. So because of their greed, they lost two potential repeat GM customers because they wanted to rake in the cash instead of valuing return customers. I was looking to see if I could also get out of my lease early on another GM car I have, but now GM put out the rule saying it can’t be sold to any dealer other than a GM dealer. Probably the last GM product I buy for a while.
It’s not surprising that they are raking in the profits…can’t blame them, but there are certainly better options out there if you shop around and keep your options open.
Sure, dealers are making more money per vehicle but losing sales because of shortages. Therefore, the gross income might be the same. You have to remember and no matter what they state in sales literature, they only care about themselves, that is get the most money out of every customer. But to many customers forget, dealers need you more than you need them.