GS69

http://www.autonews.com/article/20161128/RETAIL07/311289916/which-brands-generate-the-best-profits

Profits at Toyota and Honda dealerships are growing, while stores selling the Lexus, Audi, Infiniti and Acura luxury brands are seeing double-digit profit declines this year, estimates by Haig Partners show.

Nissan and Acura dealers experienced the biggest declines, the calculations, included in the quarterly Haig Report, show.

This is the 1st time such data has been published, said Alan Haig, president of buy-sell advisory firm Haig Partners in Fort Lauderdale, Fla. His company calculated the figures using raw data from NCM Associates, and plans to do so regularly from now on.

"This visibility into earnings will give owners, buyers and sellers insight into what they should be doing," Haig said. It can also spark conversation between dealers and automakers on ways to improve, he said.

"If you're a Nissan dealer and the factory is critical of your performance, you don't really know how your store is performing compared to other dealers," Haig said. "They can now look at this and say, "Nissan, your business model is netting dealers about $1 million a year, but Toyota and Honda dealers are netting $2.5 to $2.1 million.'"

Haig's team took performance figures from NCM, which analyzes monthly financial and operating data from more than 4,100 dealerships, and annualized January-September results. The team then adjusted each brand's performance for the average store size in new-unit sales as published by Automotive News, vs. the average store size that reports to NCM, and eliminated fleet sales. Haig Partners only included franchises for which it had data on at least 100 dealerships or 20 percent of that franchise's total U.S. dealerships.

Some of the results were surprising. For example, despite strong consumer demand for trucks, domestic brands saw declines in year-over-year profits.

Jaguar/Land Rover reported the highest profit per franchise: $3.3 million. Because Land Rover, as a small niche brand, can "make more profits off each car and their expense structure is lower, they can net more profit," Haig said.

Overall, estimated year-over-year profits on luxury brands were down for two reasons: consumers' shifts to trucks, and high inventory problems causing dealers to sell cars at a discount.

The low-volume, low-gross-profit-per-unit model appears to be failing, Haig said. "That's Mazda, Kia and Hyundai," he said. "Sales per location are not high, and profit per car is not high. We all knew that, but it's good to see actual data per franchise."

Toys4RJill

Interesting article, seems more like some wild speculation in the projections of how much profit the dealer is making.

mmarshall

Since vehicles, and vehicle-types, even within one brand-name, can vary widely one to the next in profitability, perhaps a better question is what vehicles, not brands, draw the greatest profits. Traditionally, almong mass-produced vehicles, large, American-brand body-on-frame pickups and SUVs (F-150, Silverado, Ram, Suburban, Tahoe, Expedition, etc.....) have been most profitable for automakers. Industry estimates that an average 7K to 9K is profited for each one of these vehicles sold. (that is at the automaker level, not necessarily the dealership).

Among dealerships, of course, profitability varies by local supply and demand, and how much any particular customer is willing to pay for whatever vehicle he or she is dealing on. I've seen some popular hot new vehicles marked up as much as 100% over list (CRX, Miata, two-seat Thunderbird, Prowler, PT Cruiser, Camaro SS, Shelby Cobra Mustang, etc..), for those who simply have to keep up with the Jones'es or be the first one on the neighborhood to have one in the driveway.