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It looks as if 2016 is shaping up to be a record year for new vehicle sales for cars and light trucks, reaching 17.7 million vehicles, according to Steven Szakaly, NADA’s Chief Economist.
Szakaly made the comments at the opening press conference of the 2016 National Automobile Dealers Association (NADA) Convention & Expo in Las Vegas, Nev.
Szakaly briefed journalists about his perspective on the macroeconomic market, taking them through the factors behind his strong sales forecast, including low interest rates, low gasoline prices and a good product mix for dealers to sell. “The economy is still doing remarkably well,” said Szakaly. “It remains a great time for consumers to buy a car.”
Consumer appetite for trucks and SUVs continues to be strong, and the NADA expects light trucks to represent 57 per cent of the new car market for 2016, with cars making up only 43 per cent. “Consumers appreciate the utility, convenience and cargo room that light trucks provide, and buyers continue to favour them over cars.”
He says there was a hiccup in the equities market, but that doesn’t really impact vehicle purchase decisions. Housing values, however, do impact vehicle sales and consumer confidence, and the market is reasonably strong.
Although average car payments have gone up 12 per cent, he says they are still manageable for households. The average transaction price on a new vehicle was nearly $34,000 at the end of the first quarter, fueled by sales of higher priced trucks and consumers buying more options and upgrades on their vehicles.
The average number of vehicles per household has gone up, despite predictions from some analysts that this number would be declining.
NADA DATA 2O15
The NADA also used the event to release their NADA Data 2015 that presents a financial profile of new car dealerships in the United States.
Szakaly said fierce competition on sales and service of vehicles has kept things tight for dealers, and good for consumers in terms of lower prices. “Net profits have been stable for about five years. It has remained flat at 2.2 per cent,” said Szakaly.
Some of the other NADA Data 2015 presented included:
- A record 17.3 million-plus new cars and light trucks sold;
- Total dealership revenue, including new- and used-car sales, as well as parts and service sales, reached a new high of $862-billion in 2015, an increase of 6.9 per cent from 2014;
- Dealerships wrote more than 200 million repair orders, with more than $97-billion in service and parts sales;
- New-car dealership employment reached 1,110,700, up 4.3 per cent from 1,064,000 employees in 2014;
- Average number of employees per dealership was 67, up 3.1 per cent from 65 employees in 2014;
- Annual payroll at new-car dealerships was $62.8-billion in 2015, up nearly eight per cent from 2014;
- Average dealership payroll was $3.8-million, up nearly 8 per cent;
- Average new vehicles sold per dealership was 1,050;
- Total number of new-car dealerships was 16,545, up 149 dealerships from 2014;
- New-car dealerships sold 18.76 million used vehicles (10.86 million were retailed and $7.90-million were wholesaled).
WORKFORCE STUDY
Szakaly also shared findings from the NADA’s 2015 Dealership Workforce Study.
That report showed that the automotive retail industry is a “growth industry with earnings opportunity.”
“America’s new car dealerships created new jobs, provided well-above-average wages and generated weekly earnings growth that kept pace with or exceeded U.S. private-sector income growth,” said Szakaly.
Turnover in the industry were below industry averages for the private sector, with the exception of sales consultants, whose turnover rate above 70 per cent greatly exceeded the industry average of 44 per cent.
The 2015 study analyzed 290,000 payroll records, and answered a number of other questions related to the dealership’s workforce, such as weekend work schedules, and employee benefits.
