New vehicle dealers “bounced back strongly” in the first half of the year, when retail sales jumped 39.4% from the low levels of the first half of 2020 and reached record heights. Retail sales even exceeded the levels seen in 2018 or 2019, according to DesRosiers Automotive Consultants (DAC).
However, in exploring the economic health of the new vehicle dealer community, DAC found that new vehicle sales volumes offer only a part of the larger picture— parts and service, used vehicles, and more, also need to be considered as they are part of the revenue flow.
Source: DesRosiers Automotive Consultants Inc., and Statistics Canada
“One point of note offsetting the positive retail sales figure is the impact of price increases,” said DAC. “Looking at June CPI data, the price of purchasing light vehicles increased 4.1% against June 2020—higher than the 2.5% increase noted in December 2020. Price inflation specifically for used vehicles would have been even greater.”
DAC’s estimates point to price increases for used vehicles over the same period were over 20%.
Source: DesRosiers Automotive Consultants Inc., and Statistics Canada
As for employment at new vehicle dealers, as of June 2021, this increased 13.7% above June 2020 levels. But even with the bounce back in retail sales, employment levels have yet to reach 2019 figures again, as they currently remain 10.2% lower. A bounce back and even further growth remains “a point of some consideration,” said DAC, especially with the acceleration of online vehicle buying options.
Source: DesRosiers Automotive Consultants Inc., and Statistics Canada
“Despite the continuing difficulties for new vehicle sales volumes brought on by the semiconductor shortage, new vehicle dealers are performing strongly financially,” said Andrew King, Managing Partner of DAC. “Record high retail sales, a limited need for advertising and discounting, and reduced employment levels create a strong financial picture for the new vehicle dealer community.”
