New-Car Dealers’ Profits Up 31% in ’98

Here’s something to help arm you against the sales manager’s anguished cries when you suggest that there’s more air to be squeezed out of the price of that new car you’re bargaining for: Last year was the best in almost half a century for the nation’s independent new-car dealers.

Average pretax profit was up 31% from 1997, to about $400,000 per dealership, the National Automobile Dealers Assn. says. Sales rose 6% to an average of $23.8 million per dealership, with an average pretax margin of 1.7%. The highest profit margins, an average of 3%, were posted by European car dealerships. That’s about $1,500 on a $50,000 car. Dealers of Asian cars averaged a 1.9% return on sales, while domestic franchises netted an average of 1.6% per sale.

The industry trade group represents more than 19,500 new-car and truck dealers who collectively hold almost 40,000 domestic and import franchises. Together, they sold 15.5 million new cars and trucks and 12.1 million used vehicles last year.