Insights on US Vehicle Sales in 2017
2017: The Last, Best Year?
Total 2017 US light vehicle sales were a very respectable
17.24-million units, 1.7% fewer than 2016’s record year,
but exceeding 17 million units for the third consecutive
year. Early-2018 forecasts indicate, however, a decrease
of 2.9%, to 16.7 million units.
Of the major auto brands, Infiniti recorded the largest unit
sales increase during 2017, or 10.9%; followed by Audi,
+7.8%; Mitsubishi, +7.7%; Subaru, +5.3%; Volkswagen,
+5.2%; and GMC, +2.6%.
Among the top-5 brands, only Honda, +0.7%, and Nissan,
+1.0%, increased their unit sales for 2017, while Ford
decreased 1.1%, Chevrolet, 1.5%; and Toyota, 0.6%.
Average Dealer Still Delivering
Significant Profits
According to the National Automobile Dealers Association
(NADA) 2017 Mid-Year (January–June) Report, the
average light-vehicle dealership’s total sales decreased
very slightly, $29.43 million, compared to $29.46 million for
January–June 2016.
By November 2017, however, the NADA data for the first
11 months of the year revealed a 0.6% increase for the
average light-vehicle dealership, or $54.35 million,
compared to $54.03 million for the first 11 months of 2016.
Net profit before tax as a percent of total sales for the
January–November 2017 period were approximately the
same as the January–November 2016 period, or +2.4%
and +2.5%, respectively.
Mass-Market Dealerships
Outperform Other Dealership
Categories
Of the four sub-markets in the NADA Average Dealership
Profile for January–November 2017, only mass-market
dealerships had positive total sales, at 0.7%. Domestic
dealerships were 0.0%; imports, -2.9%; and luxury, -8.1%.
When the metric was net profit before tax as a percent of
total sales, all four sub-markets were positive: luxury,
+2.8; import, +2.6%; mass-market, +2.4%; and domestic,
+2.2%; however, their total net profit before tax was less
than 2016.
Only the mass-market sub-sector recorded an increase in
new-vehicle department total sales, comparing January–
November 2017 to January–November 2016, or +0.7%,
while domestic dealerships were -0.6%; imports, -3.3%;
and luxury, -10.4%.
Trucks Keeping the Industry
Between the Lines
As the table on page 2 of the Profiler indicates, 2017
light-duty truck sales saved the industry’s “bacon” for the
year. Of those total light-duty truck sales, full- and mid-
size pickup trucks totaled 2.8 million units, or a 4.8%
increase from 2016.
During 2017, pickup trucks represented a 16.4% share of
all US light-vehicle sales. Ford’s F-Series full-size pickup
truck models sold almost 900,000 units while total units
of all General Motors’ pickup models sold were
approximately 950,000.
For the commercial-truck market, NADA reported a total
of 415,042 medium- and heavy-duty truck sales, a 3.8%
increase from 2016, with medium-duty increasing 7.6%,
but heavy-duty decreasing -0.2%.
Plenty of Work for
Parts & Service
Service, parts and body shop work are major sources of
revenue for car dealerships. According to NADA,
combined, they accounted for 48.9% of total gross sales
and 12.2% of total sales at the average US dealership for
the January–November 2017 period.
In a February 2018 article,
Automotive News
reported that
there will be 241 cars and light-duty trucks on US roads for
each dealer service bay by mid-2018. In addition, an
estimated 68.3 million vehicles will be off warranty during
the 2018–2020 period.
Dealerships’ service departments are expected to be kept
busy through spring 2018, as the top weather-related car
accidents (2005–2014) were wet pavement, rain,
snow/sleet, snowy pavement, icy pavement and fog.
Tech Is Tailgating
Our monthly Automotive Update Reports devote
considerable space to electric and autonomous vehicles
and associated technologies, but many vehicles, as early
as 2019 for Ford models, will have 100% connectivity,
transforming them into a mobile device.
Dealerships are faced with the challenge of needing two
separate service channels and additional technician
training and tools, as consumers buy more electric
vehicles while many vehicles with internal-combustion
engines will remain on the road.
Telecommunications companies are about to start the
transition from 4G to 5G connectivity, which will be vital for
the huge surge in data that autonomous vehicles must
share to operate safely, efficiently and in unison.
Advertising Strategies
As noted in more than one of our monthly Automotive
Update Reports, the car dealerships that transition from
the “featured model/price” TV commercial message to one
that drives more consumers to their Websites are likely to
sustain and build their brand.
Since parts and service are responsible for almost 50% of
the average dealerships’ revenues, their marketing and
advertising, regardless of the media, should continue to
tout the professionalism and skills of the service staff and
its customer conveniences.
With many experts predicting the total disruption of the
dealership business model, dealers with the flexibility and
foresight to adjust are more likely to survive; and, as the
changes occur, must use their ad dollars to position
themselves as leaders of the new model.
New Media Strategies
As digital natives (Gen Zers and Millennials) age and
become dealerships’ primary customer base, it’s extremely
important that dealers move more of the buying process to
their Websites, including F&I forms, etc., and make sure
they are mobile-friendly.
Dealers should consider creating explainer videos of new
tech features on the latest models, both to capture more
younger consumers who prefer video content and to be
known as the dealerships that are the “new-tech” leaders
in their market.
Dealerships will do much to “humanize” their brand/image
by being very active in community projects, including
employee volunteerism. All of these efforts and events
should become videos for social media posting and to
encourage customer participation.
The US vehicle sales data for 2017 showcases trends in light-vehicle sales, dealership profits, truck sales, and service revenue. Discover key insights on major auto brands, dealership performance, and the impact of trucks on the industry.
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Presentation Transcript
2017: The Last, Best Year? Total 2017 US light vehicle sales were a very respectable 17.24-million units, 1.7% fewer than 2016 s record year, but exceeding 17 million units for the third consecutive year. Early-2018 forecasts indicate, however, a decrease of 2.9%, to 16.7 million units. Of the major auto brands, Infiniti recorded the largest unit sales increase during 2017, or 10.9%; followed by Audi, +7.8%; Mitsubishi, +7.7%; Subaru, +5.3%; Volkswagen, +5.2%; and GMC, +2.6%. Among the top-5 brands, only Honda, +0.7%, and Nissan, +1.0%, increased their unit sales for 2017, while Ford decreased 1.1%, Chevrolet, 1.5%; and Toyota, 0.6%.
Average Dealer Still Delivering Significant Profits According to the National Automobile Dealers Association (NADA) 2017 Mid-Year (January June) Report, the average light-vehicle dealership s total sales decreased very slightly, $29.43 million, compared to $29.46 million for January June 2016. By November 2017, however, the NADA data for the first 11 months of the year revealed a 0.6% increase for the average light-vehicle dealership, or $54.35 million, compared to $54.03 million for the first 11 months of 2016. Net profit before tax as a percent of total sales for the January November 2017 period were approximately the same as the January November 2016 period, or +2.4% and +2.5%, respectively.
Mass-Market Dealerships Outperform Other Dealership Categories Of the four sub-markets in the NADA Average Dealership Profile for January November 2017, only mass-market dealerships had positive total sales, at 0.7%. Domestic dealerships were 0.0%; imports, -2.9%; and luxury, -8.1%. When the metric was net profit before tax as a percent of total sales, all four sub-markets were positive: luxury, +2.8; import, +2.6%; mass-market, +2.4%; and domestic, +2.2%; however, their total net profit before tax was less than 2016. Only the mass-market sub-sector recorded an increase in new-vehicle department total sales, comparing January November 2017 to January November 2016, or +0.7%, while domestic dealerships were -0.6%; imports, -3.3%; and luxury, -10.4%.
Trucks Keeping the Industry Between the Lines As the table on page 2 of the Profiler indicates, 2017 light-duty truck sales saved the industry s bacon for the year. Of those total light-duty truck sales, full- and mid- size pickup trucks totaled 2.8 million units, or a 4.8% increase from 2016. During 2017, pickup trucks represented a 16.4% share of all US light-vehicle sales. Ford s F-Series full-size pickup truck models sold almost 900,000 units while total units of all General Motors pickup models sold were approximately 950,000. For the commercial-truck market, NADA reported a total of 415,042 medium- and heavy-duty truck sales, a 3.8% increase from 2016, with medium-duty increasing 7.6%, but heavy-duty decreasing -0.2%.
Plenty of Work for Parts & Service Service, parts and body shop work are major sources of revenue for car dealerships. According to NADA, combined, they accounted for 48.9% of total gross sales and 12.2% of total sales at the average US dealership for the January November 2017 period. In a February 2018 article, Automotive News reported that there will be 241 cars and light-duty trucks on US roads for each dealer service bay by mid-2018. In addition, an estimated 68.3 million vehicles will be off warranty during the 2018 2020 period. Dealerships service departments are expected to be kept busy through spring 2018, as the top weather-related car accidents (2005 2014) were wet pavement, rain, snow/sleet, snowy pavement, icy pavement and fog.
Tech Is Tailgating Our monthly Automotive Update Reports devote considerable space to electric and autonomous vehicles and associated technologies, but many vehicles, as early as 2019 for Ford models, will have 100% connectivity, transforming them into a mobile device. Dealerships are faced with the challenge of needing two separate service channels and additional technician training and tools, as consumers buy more electric vehicles while many vehicles with internal-combustion engines will remain on the road. Telecommunications companies are about to start the transition from 4G to 5G connectivity, which will be vital for the huge surge in data that autonomous vehicles must share to operate safely, efficiently and in unison.
Advertising Strategies As noted in more than one of our monthly Automotive Update Reports, the car dealerships that transition from the featured model/price TV commercial message to one that drives more consumers to their Websites are likely to sustain and build their brand. Since parts and service are responsible for almost 50% of the average dealerships revenues, their marketing and advertising, regardless of the media, should continue to tout the professionalism and skills of the service staff and its customer conveniences. With many experts predicting the total disruption of the dealership business model, dealers with the flexibility and foresight to adjust are more likely to survive; and, as the changes occur, must use their ad dollars to position themselves as leaders of the new model.
New Media Strategies As digital natives (Gen Zers and Millennials) age and become dealerships primary customer base, it s extremely important that dealers move more of the buying process to their Websites, including F&I forms, etc., and make sure they are mobile-friendly. Dealers should consider creating explainer videos of new tech features on the latest models, both to capture more younger consumers who prefer video content and to be known as the dealerships that are the new-tech leaders in their market. Dealerships will do much to humanize their brand/image by being very active in community projects, including employee volunteerism. All of these efforts and events should become videos for social media posting and to encourage customer participation.
