U.S. auto retailers report falling new vehicle margins

Auto Retailers Profitability Challenges



Several U.S. car shops reported disappointing fourth-quarter profits this week, as price cuts and incentives to entice buyers strained new-vehicle margins. Higher vehicle manufacturing has eased supply and reduced dealer profitability, auto retail chain executives warned this week.


This contrasts the high prices that auto dealers have demanded in recent years, capitalizing on strong demand for new automobiles and limited inventories of popular models due to supply chain bottlenecks.


However, despite reduced costs and more enormous incentives, new vehicle sales in the United States slowed in January, according to the survey.


Due to their more significant maintenance costs and lower resale prices, E.V.s have seen various degrees of demand; therefore, they have had to spend more to sell them.


Even worse, according to Cox, EV prices have dropped dramatically in the U.S. during the previous year, primarily due to pricing reductions at Tesla. Dealer Lithia Motors had a decline in their new vehicle profit to 7.9%.


Retailers, on the other hand, have shown trust in their after-market service departments, increasing their earnings from new car maintenance even if additional software and technology added a layer of complexity.

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