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
Mar 18, 2025 - New Light Vehicle Sales Up; Tariff Threats Loom
- US new light vehicle seasonally adjusted annualized sales (SAAR) rose 2.1% year over year in February 2025, totaling 16 million units, according to NADA Market Beat. The results were a dip from December 2024, which had the highest monthly SAAR in almost four years. Wards Auto estimates that auto sales in February will be about 1 million vehicles. Total fleet inventory of new light vehicles in the US, however, plummeted 16.3% year over year to 210,000 units. The drop in inventory is a result of the supply problems from on-again, off-again tariff threats against Mexico and Canada, key automobile and auto parts US trade partners. “American made” cars are loaded with Canadian and Mexican parts, and NADA Market Beat predicts that if Trump’s threatened tariffs go into effect, it will raise the average price of new vehicles from $4,000 to $12,000.
- Auto industry leaders are increasingly sounding the alarm on the Trump administration’s threats to tariff automobiles, with Ford CEO Jim Farley warning that, “"Long term, a 25% tariff across the Mexico and Canada borders would blow a hole in the U.S. industry that we've never seen.” With prices of new cars already up significantly to an average of $50,000, the effect of tariffs could add an average of $9,000 per car to the cost, according to an Anderson Economic Group analysis of inventory and where cars are assembled and built. Auto manufacturers like Ford and Stellantis are halting production on certain models, and a protracted trade dispute could eventually result in layoffs across the industry. In addition, if the tariffs apply only to Mexico and Canada, carmakers from Japan, South Korea and Germany stand to flood the US market.
- New car auto dealerships currently sit on an inventory of about 3.2 million units in December 2024, according to Wards Auto, nearing pre-pandemic levels. Ordinarily high inventory would translate into lower prices, but new cars continue to get more expensive. The average price of a new car increased to about $50,000 in the fourth quarter of 2024. Part of that rise comes from inflation and high interest rates over the last four years. Credit reporting company Experian found that because of those rates the average monthly payment on a new car was $760 in 2004, a 30% jump from five years ago. Auto manufacturers are also streamlining their lineups and discontinued many lower-priced models, shrinking their number from 72 models in 2019 to 22 last year. Carmakers instead shifted their focus to producing luxury SUVs to make up lost profits.
- 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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