Auto dealerships are approaching a new normal likely to be characterized by higher overall profitability with a store’s brand and geography as differentiating factors, according to full-year 2024 data from the Presidio-NCM Average Dealership Performance Benchmark.
Net pretax profit for the average U.S. franchised store dropped 24.4 percent for full-year 2024 compared with 2023, up from the 30.4 percent decline recorded for the first nine months of 2024. George Karolis, president of The Presidio Group, sees this leveling as marking the start of recovery.
“The latest evidence, both from the Presidio-NCM data and Presidio’s year-end dealer survey, indicates that the auto retail sector is at the tail end of the Great Normalization,” said Karolis in a statement with the report’s release. “Dealers are more optimistic about their future profitability heading into 2025, and we expect their new normal will include profitability that stabilizes at levels well above pre-pandemic benchmarks, at least for certain brands.”
Revenue Grows
Even with last year’s profit decline, the average store looks to be stabilizing at a level well above what was typical before the pandemic started in 2020. The average dealership’s pretax profit for full-year 2024 was 1.7 times 2019’s, according to an analysis of the Presidio-NCM data.
As for what is happening at the average rooftop, inventory availability improved to 883 new vehicles in 2024, up 2.8 percent. The average store retailed 729 used vehicles, the same number recorded in 2023. Total revenue per store averaged $83.9 million, an improvement of 0.7 percent and a pivot from the first nine months of 2024 when the average store’s revenue was down 2.0 percent.
Vehicle margins, down sharply for 2024, saw their rates of decline narrow as the year ended. The average gross profit per new vehicle dropped 33.0 percent for the full year to $2,247. That metric had declined 33.5 percent through the first nine months of the year. Average gross profit per used vehicle dropped 15.9 percent to $1,399 for all of 2024. The used rate of decline had been 19.3 percent through the first nine months.
Positioned for 2025 Rebound
While profitability remains elevated on average compared with before the pandemic, there was much more variability in individual dealership performance in 2024 that was influenced by brand and geography, according to the authors. Respondents to the survey indicated this is due to some automakers have aligned production, inventory and incentives much better than others.
While NCM doesn’t report data for individual brands, that trend can be seen in Presidio-NCM benchmark data segmented by brand type. The full-year declines across all three brand segments narrowed, the differences among the luxury, domestic and import segments illustrate the importance of brand during this normalization process.
“It’s encouraging to see signs of dealership profitability starting to stabilize after the falloff of the last couple of years. Dealers are now positioned to make even more of a pivot on earnings in 2025,” said Paul Faletti, CEO of NCM Associates. “To make the most of that pivot, dealers should prioritize cost control and leverage technological efficiencies to sustain and even enhance revenues and profits in this evolving landscape.”
Luxury Continued to Outperform Domestic, Imports
The luxury-brand segment once continued to outperform domestic and import-brand segments. The average luxury store experienced a 15.3 percent year-over-year profit dip for 2024; domestic was down a 25.4 percent and 26.6 percent for import.
Luxury stores continued to hold margins better as well with average gross profit per new vehicle was $5,679 for full-year 2024. While that was down from 2023’s level, it was better than the average through the first nine months of 2024, demonstrating a strong fourth quarter for the luxury segment. Gross profit per used vehicle was $1,986 for the average luxury store, down from 2023 but better than at previous points in 2024.
As a comparison, domestic stores average gross profit per new vehicle for slid sharply year over year to $1,952. The average gross profit per new vehicle for import-brand stores dropped year over year to $1,699.
“We continue to point out that though the import segment is seeing the steepest profit slide, certain brands in that segment—notably Toyota, Subaru and Honda—have some of the best-performing dealerships in the industry,” the report stated.
The Presidio-NCM Average Dealership Performance Benchmark is based on aggregated financial results of nearly 3,900 U.S. franchised dealerships of all brands that work with NCM Associates, which provides 20 groups, consulting and training to dealers. The number of outlets contributing data for full-year 2024 represented more than a fifth of the 18,000-plus franchised dealerships in the U.S.
