A breakdown of publicly traded auto retailers from Automotive News shows how softer new vehicle sales and margins in the second quarter of 2017 are affecting the industry.
Softer Sales and Margins
Considering the all-time record for new car sales was set last year, it's no surprise to see light vehicle sales on the decline. WardsAuto reports that the daily selling rate dropped for the seventh consecutive month in July.
Automotive News recently broke down how five publicly traded auto retailers—Penske, Asbury, Group 1, Sonic, and Lithia—fared in the second quarter of 2017. Used car sales, F&I revenues, and service and parts income increased, but new car sales and margins shrank. Here's a brief overview:
- Penske Automotive Group - Both net income and revenue were up for Penske in Q2 2017 largely thanks to their used-only dealership groups. The units sold through Penske's U.S. used-only dealership groups earned approximately $400 more in gross profit per unit (including F&I) than those sold at their franchised stores.
- Asbury Automotive Group - Asbury's net income was down 13 percent year-over-year in Q2. They reported declines in gross profit margins per unit in both new and used vehicle sales.
Anticipating continued new vehicle sales declines, these groups have either begun to cut costs or have plans in place to start doing so. Here are some of the measures they are taking:
- Group 1 Automotive Inc. is cutting costs by reducing inventory, advertising and personnel.
- Asbury exited its two used-only stores due to "dismal" profits during the second quarter.
- Sonic Automotive Inc.'s Jeff Dyke, executive vice president of operations, told Automotive News that they "think margins are going to be in this ballpark the next few quarters," so they have also begun cutting costs.
The LotPro Solution
Auto Credit Express has a great way for dealers to combat slowing sales and tighter margins: our LotPro software. LotPro is the complete subprime sales solution that prioritizes gross profit.
LotPro's claim to fame is the Deal Excelerator tool. With the click of a button, this feature will scan your entire inventory to find the most profitable units you have in stock that fit a lender's payment call in seconds.
LotPro is able to store all of your lenders and their programs. Essentially, all you need to do is enter the consumer's down payment, trade-in, and monthly payment information. Once entered, the system will scan your entire booked inventory, shop lender versus lender, and display qualifying inventory based on gross profit.
Once the customer selects their car, you can massage the deal with back-end products right in LotPro. Because your lender's programs will be built in, the deal will always remain correctly structured and never exceed max advance.
LotPro makes it faster, easier and more profitable for dealers to sell to subprime consumers. Plus, Auto Credit Express is also one of the country's premier special finance lead originators. Together, these resources can help your store fight through slowing sales and relaxed margins.
To learn more about the high-margin LotPro system, or any of our other great dealer tools and services, give us a call at 888-535-2277. Or, simply submit the contact form on our website and we'll get back to you.