Two of the most relevant measures of a dealership’s operations are net income to gross profit and net income to sales.
Pre-COVID goals for these two indicators were 20% and 3%, respectively. The average dealer fell slightly below these figures in years prior to the pandemic.
Our client base exceeded these goals by a wide margin for the year-to-date September 30, 2023, and 2022 periods.
The average results are as follows:
| 2023 | 2022 | |
| Net Income as a % of Total Sales | 4.31% | 5.74% |
| Net Income as a % of Gross Profits | 38.17% | 44.92% |
The decreases from 2022 are a direct result of dealers realizing lower grosses on new and used vehicle sales. With rising interest rates and an increasing supply of vehicles, it will be difficult to maintain the high gross profits achieved in recent years. As one of our dealers explained recently, these “high grosses” may shrink but never to the levels of the pre pandemic era.
If you have any questions regarding this article, please contact Paul McGovern at 800-849-6022 or at PMcGovern@DowneyCoCPA.com.
