Record Highs and Lows

The Cost of operating a dealership over the last few years has never been higher, somewhat surprisingly, it has also never been lower. Cox’s Cost index reached a record low in the midst of the pandemic followed by a record  high in 2022, and costs remain just below that all time high today. 

“Despite high interest rates and stubborn inflation, the U.S. consumer continues to prop up the economy,” according to Cox Automotive Chief Economist Jonathan Smoke. “Auto sales are slow by historical standards, but the sales pace has been improving in early 2023, giving dealers reason to feel somewhat optimistic about the year ahead.”

“For franchised dealers selling new vehicles at or above MSRP, the profit picture continues to be very strong, The profit index for franchised dealers is down from the records seen in 2021 but still healthy and well above the long-term, pre-pandemic level.”

The fact that franchise dealers are still realizing healthy profit margins at this record high cost level is encouraging and somewhat symptomatic of the ongoing global struggle with inflation. However, there are also lessons to be learned from the patterns that lead to record low costs as well. The dynamics that allowed for the record low costs during the pandemic were largely the result of slowing operations and reduction of personnel. Sophisticated dealers in today’s market conditions are taking advantage of those lessons learned by keeping the fat off of operational expenses while accommodating the ongoing spending habits of the willing consumer. 

One of the most effective ways of keeping dealer personnel expenses lean and mean without sacrificing the quality of the customer’s experience is through the utilization of outsourced BDC with Industry leader BDC United. Scan the qr code below to schedule a demo and learn how BDC United can empower your dealership to set its own record highs while keeping costs low.

https://www.coxautoinc.com/news/q1-2023-cadsi/