Auto Dealerships
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 17,000 new car dealerships in the US typically manage five distinct departments: New Vehicle Sales, Used Vehicle Sales, Finance and Insurance (F&I), Parts, and Service. One-third of all US new car dealerships also offer collision and body shop services. Used car sales, financing, and parts and repairs tend to be more profitable divisions for dealers.
Low Profitability
Customers are increasingly savvy about the true price of a vehicle, using the Internet as a tool to find the best price and to sniff out extraneous up-sells.
Dependence on Financing
Dealers purchase vehicles at the time of acquisition, not when a car is sold to a customer.
Industry size & Structure
A typical new car dealership employs around 50 people and has total annual revenue of over $64.7 million.
- There are about 17,000 new car dealerships in the US with total annual sales of over $1.1 trillion.
- The average new car dealership sells just over 1,000 vehicles per year. The average price of a new vehicle is about $47,200, a figure that generally has tracked closely with inflation over the past decade but accelerated during the pandemic.
- Traditionally, franchised dealers held around 2 million domestic vehicles in inventory and 1.7-1.9 million imports. A typical dealer had a 65-75-day supply of domestic vehicles in inventory and a 50-55-day of imports. Post-pandemic, franchise dealers are holding some 1.8 million domestic vehicles and about 430,000 imports. Now, a typical dealer has a 44-day supply of domestic vehicles in inventory and a 35-day of imports.
- Popular brands include GM (16.7% of total new car sales), Toyota (14.5%), Ford (12.5%), Hyundai (10.7%), Stellantis (Fiat Chrysler, PSA Group – 9.8%), and Honda (8.5%).
- The largest auto dealership groups in the US include AutoNation, Lithia Motors, Penske Automotive, and Sonic Automotive.
Industry Forecast
Auto Dealerships Industry Growth
Recent Developments
Jan 30, 2025 - Vehicle Leasing and Hybrid Sales Increase
- Auto Dealers in the US sold 15.9 million vehicles in 2024, up 2.2% from the previous year, according to Wards Research. The increase resulted from a boost of new-car inventory (after years of Covid-related shortages) and strong year-end holiday sales that were up 6% in December. Vehicle leasing was popular among car buyers and now accounts for roughly a quarter of all sales. Wards predicts only a modest rise in new car sales in 2025. When interest rates combine with high prices, monthly auto payments have risen to an average of $750 a month. A 2024 cut in short-term interest rates has done little to ease consumer pain. Hybrid vehicle sales proved increasingly popular and had the biggest gains in 2024, per Cox Automotive. Toyota, the world’s largest maker of hybrids, reported a 50% increase in hybrid sales. The category now accounts for 43% of Toyota’s total revenue.
- A new loyalty study from LexisNexis found that US brand affinity increased 1.8% in 2024 to 52.6% and is closer to pre-pandemic levels, according to Body Shop Business. There were 47 brands analyzed in the study; 11 surpassed the industry average in brand loyalty, an increase from the nine brands in 2024. The study also tracked fuel type loyalty among consumers who replaced a new vehicle with another. The transition to electric vehicle (EV) and hybrid powertrains from legacy internal combustion engines (ICE) powertrains has led to lower ICE brand loyalty rates, falling from 97.6% in 2019 to 85.2% in 2024. Electric vehicle loyalty declined slightly to 74.7% in 2024 and hybrid vehicle replacements jumped 5 percentage points to 52% in 2024.
- US new light-vehicle seasonally adjusted annualized sales (SAAR) rose 5.5% in December 2024 year over year, totaling 16.8 million units, according to NADA Market Beat. The results were the highest monthly SAAR since May 2021. Year to date, new light vehicle sales totaled 15.8 million units, an increase of 2.2% compared to 2023. Categories performing well in 2024 include all segments of alternative-fueled vehicles, which represent 20% of new vehicles sold. Ten percent of all new vehicles sold were conventional hybrids in 2024, up from 7.6% in 2023. Average incentive spending per unit increased to $3,442 in December 2024, up $809 year over year. Light-vehicle sales in Q4 2024 totaled 4.1 million units, up 7.7% from Q4 2023. New light-vehicle inventory is expected to be just below 3 million units for most of 2025. The forecast for light-vehicle sales in 2025 is 16.2 million units, up 2% compared to 2024.
- Consumer confidence levels declined in December 2024, falling by 8.1 points from the previous month, according to The Conference Board. The Consumer Confidence Index was 104.7 in December 2024 from 112.8 in November 2024. Dana Peterson, chief economist at The Conference Board, noted that those remaining most confident on a six-month moving average basis confidence were those aged under 35 and those in the income category of over $100,000. Per Peterson, “The recent rebound in consumer confidence was not sustained in December as the Index dropped back to the middle of the range that has prevailed over the past two years.” Purchasing plans for homes decreased while plans to buy new cars and big-ticket items rose in December 2024 on a six-month average basis.
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