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It’s a busy week around the ASOTU-verse as we’ve got people traveling in all different directions. Today, we’re talking about a new study showing a significant drop in dealership profitability, look at how Carter Myers is ahead of the curve on employee healthcare, and look inside a casket that feels like a Cybertruck.
Show Notes with links:
- U.S. franchised dealerships experienced a significant 33.4% drop in average pretax profit during the first half of 2024, reflecting a broader trend of shrinking profitability in retail auto.
- According to a year over year dealership performance benchmark report from Presidio Group and NCM Associates that looked at 3900 franchised dealers, the average U.S. dealership sold 410 new vehicles (down 1.4%) and 364 used vehicles (flat from last year) in the first half of 2024.
- Front end gross profit per new vehicle dropped 32.9% to $2,408, used vehicle profit fell 22.9% to $1,404, with total revenue per store down 3.4% to $40 million.
- This marks a 50% reduction from peak profitability in 2021.
- Variable gross profit has fallen 32% since 2022, while personnel expenses only dropped 6%.
- Overall dealer sentiment is positive with over half of the survey dealers expecting profits to rise in the next 12 months.
- "We're surprised that the typical dealership hasn't adjusted its spending and variable costs as quickly and appropriately as it should have given the decline in profitability over the last two years," George Karolis, president of Presidio Group, said in a statement. "This is a time when dealers must be nimble and adjust quickly to the industry's changing circumstances, and many of them have not."
- Carter Myers Automotive in Virginia, widely known for their ESOP, has found a novel way to manage escalating health care costs by adopting a self-funded insurance plan, with potential premium holidays if year-end surpluses are achieved.
- Employees are encouraged to make cost-effective health care choices, with any savings going back to offset future premiums.
- CMA experienced no premium increases for the first two years and provided two premium holidays, each lasting about 3 months, an average savings of $900/household
- Focus groups and surveys helped shape the plan, ensuring buy-in from employees.
- Liza Borches, CEO of CMA shared, “The benefit of an ESOP is that you share the responsibility. As we were looking at some of our benefit plans, we said, 'How do we apply the same philosophy to other areas of our business?' "
- Titan Casket borrows from Tesla’s playbook by creating a bulletproof casket complete with vegan leather, with a design that looks oddly similar to Tesla’s Cybertruck.
- The HyperCasket is available for $9,999 on pre-order with delivery starting in Q4 of this year.
- To keep design affiliation clear, their website states “Titan’s Hypercasket
Join Paul J Daly and Kyle Mountsier every morning for the Automotive State of the Union podcast as they connect the dots across car dealerships, retail trends, emerging tech like AI, and cultural shifts—bringing clarity, speed, and people-first insight to automotive leaders navigating a rapidly changing industry.
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