There are many pressures on the traditional Auto Dealer model. There are competitive and regulatory pressures due to the shift to EVs, but there are simple financial and demographic issues. Our last post highlighted the cost of a new vehicle, which is hovering around $50k. This may explain why 72% of new cars are financed with greater than 60-month financing terms.
Another pressure on dealer sales of new vehicles is how long consumers hang onto their cars. In 1995, the average for Light Vehicles, according to the US Bureau of Transportation Statistics, was 8.4 years. In 2021 that had climbed to 12.1 years.
What does this translate to in the real world? According to the NADA, the average number of new cars sold per new vehicle salesperson fell from a high of 112 (2021 was an outlier) to 102 in 2022. Used car sales per used car salespeople actually climbed a bit from 134 in 2015 to 137 in 2022. Since higher demand means higher prices, the cost of a used vehicle sold climbed from $19,400 to $30,736.
The next post will pull together a series of statistics about the US dealership marketplace. You will find it at www.ekalore.com/alien-invaders
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