The second-quarter dealer survey orchestrated by KeyBanc Capital Markets confirmed how used-vehicle and F&I performances are helping to pick up the slack dealerships might be experiencing within the new-car operations.
The report shared this week with AuSM indicated trends in F&I gross profit per unit maintained a favorable trend with 86 percent of respondents reporting intact results in June or even increasing figures by more than $50 year-over-year).
For the full quarter, 90 percent of participating dealers noted flat or increasing gross per unit coming out of their F&I offices as 51 percent reported an increase and 39 percent reported flat results. The remaining 10 percent acknowledged a decline, according to KeyBanc’s report.
When it comes to used vehicles, KeyBanc determined the responses “remained mixed” when reviewing gross per unit on used deliveries. In June, 29 percent of respondents enjoyed a year-over-year increase of more than $50 while that same amount sustained a decline of at least $50. The remaining amount of dealers surveyed reported a “relatively intact trend.”
Looking at the full second quarter, KeyBanc found that the trend wasn’t much different, with 37 percent reporting an increase, 29 percent reporting a decline, and 34 percent reporting unchanged gross per unit for used-vehicle turns.
Meanwhile, the report pointed out that surveyed dealerships “faced renewed pressure” when it came to grosses on new-vehicle sales. A total of 86 percent of respondents reported a decline of more than $50 in July compared to this time last year.
For the full second quarter, 60 percent of respondents reported weakness in the segment, KeyBanc said.
“While we believe sales will pick up in the back half of the year, the risk appears to be to the downside,” KeyBanc added.
Also of note, the report added that parts and service gross margins remained intact, according to survey results. A consistent majority of respondents — 71 percent in June and 72 percent for the full quarter — reported a 100 basis points or more increase in parts and service gross profit margin.
Analysts closed the latest survey report by mentioning how trends spotted involving used- and new-vehicle sales is likely to continue since the amount of off-lease units available is high.
“We believe as inventory of attractive, late-model low-mileage used vehicles continues to increase, we will continue to see some new car buyers shift into the late-model used vehicles,” they said.