New NADA Report: America's New-Car Dealers Employ More Than 1 Million People

Employment up 3.4% from previous year; Warranty work performed by franchised new-car dealers totaled $14.4 billion in service and parts last year--all at no cost to the customer.

Highlights:

- Employment at U.S. franchised new-car dealerships topped 1 million people last year after falling during the recession in 2009.

- New-car dealerships employed an average of 57 people, and had an average payroll of $3 million in 2013, up 3 percent.

- As a percentage of total sales, profitability at new-car dealerships remained flat at 2.2 percent last year because of fierce price competition among dealers.

- Warranty work performed by new-car dealers totaled $14.4 billion in service and parts last year--all at no cost to their customers.

- New-car dealerships on average spent 33 percent of their advertising dollars on Internet ads, up from 26.5 percent the previous year.

McLEAN, VA--May 22, 2014: A rebounding U.S. economy and rising auto sales are having a positive impact on the employment outlook at franchised new-car dealerships across the country, says the National Automobile Dealers Association in NADA Data 2014, a report on dealership sales and financial trends.

Video Sound Bites: For broadcast quality videos of NADA Chief Economist Steven Szakaly, click here.

Employment at U.S. franchised new-car dealerships topped 1 million people last year after falling during the recession in 2009. America's new-car dealers employed 1,008,800 people in 2013, up 3.4 percent from the previous year.

New-car dealerships employed an average of 57 people, and had an average payroll of $3 million in 2013, up 3 percent. Total payroll for all new-car dealerships in the U.S. was $53.7 billion last year.

"The economic recovery is continuing, and we expect a stronger housing market, improving job prospects and continued low interest rates for auto loans to boost sales this year," said NADA Chief Economist Steven Szakaly.

New-car dealerships on average had a net, pretax profit of 2.2 percent in 2013—unchanged from the previous year. As a percentage of total sales, the 2.2 percent figure represents sales in the new- and used-vehicle departments and service and parts sales. New-car dealerships on average had a net, pretax profit of $923,248, up 10.5 percent in 2013. Total revenue at new-car dealerships reached $730 billion in 2013, an increase of 8.8 percent.

"Profitability at new-car dealerships remained flat in 2013," Szakaly added. "Fierce price competition—whether from online research, a network of competing franchised dealers or compelling new vehicles—continues to dominate an industry with slim retailing margins."

Gross margins on new-car and light-truck sales continued on a downward path in 2013—falling to 3.8 percent from the previous year.

Sales in the service, parts and body shop at new-car dealerships increased 4.8 percent in 2013. Warranty work performed by new-car dealers totaled $14.4 billion in service and parts last year—all at no cost to the customer.

New-car dealers spent $7.6 billion on advertising in 2013, up 6.1 percent. Dealerships on average spent 33 percent of their advertising dollars on Internet ads, up from 26.5 percent the previous year. Television advertising accounted for 21 percent of dealership spending, a slight increase.