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Friday, 19 November 2021 17:42

Dealership Profits Breaking Records During Car Shortage

Written by Sean Tucker, Kelley Blue Book

Index

...more than $5,000 over prices from just one year before.

 

Used Cars in Short Supply, Too

 

Used car prices have been on a similar climb.

 

High prices sent some new car shoppers into the used market instead. Meanwhile, a lull in car production after the 2008 recession left dealerships with few of the higher-mileage, older used cars they usually sell for under $10,000.

 

The average used vehicle list price at the end of September was $26,646---25% higher than September 2020. October’s numbers aren’t yet available.

 

Dealers Have Fewer Cars on Hand, But They’re Selling More of Them

 

Though dealers have fewer cars on the lot, NADA reported they’re selling more of them than in 2020.

 

Through September, the average number of new vehicles sold was 16% higher than 2020 numbers. Average per-vehicle gross profit for new cars was up 65%. Used vehicle sales were 9.4% higher than 2020 numbers at the average dealership. The average per-vehicle profit on used cars was up 36%.

 

Little Relief in Sight for Car Shoppers

 

In a normal year, we’d be telling you that prices are headed down soon. The end of the year is usually the best time to find a bargain on a new car.

 

Dealerships are often motivated to sell at a discount to help pump up their annual sales numbers as the finish line approaches. And, in December, they’re typically looking to clear out cars from the last model year before the calendar changes over and makes them look outdated.

 

But there’s little reason to believe those factors will apply to the 2021 holiday season. Our research shows that some shoppers are now delaying a new car purchase, hoping to wait out high prices. Some experts predict that the microchip shortage could stretch into late 2022.

 

Source: Kelley Blue Book

 

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